Correlation Between Alaska Air and Alliance Entertainment
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Alliance Entertainment at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Alaska Air and Alliance Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alaska Air Group and Alliance Entertainment Holding, you can compare the effects of market volatilities on Alaska Air and Alliance Entertainment and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Alaska Air with a short position of Alliance Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Alliance Entertainment.
Diversification Opportunities for Alaska Air and Alliance Entertainment
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alaska and Alliance is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Alliance Entertainment Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Entertainment and Alaska Air is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Alaska Air Group are associated (or correlated) with Alliance Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Entertainment has no effect on the direction of Alaska Air i.e., Alaska Air and Alliance Entertainment go up and down completely randomly.
Pair Corralation between Alaska Air and Alliance Entertainment
Considering the 90-day investment horizon Alaska Air is expected to generate 4.76 times less return on investment than Alliance Entertainment. But when comparing it to its historical volatility, Alaska Air Group is 4.76 times less risky than Alliance Entertainment. It trades about 0.25 of its potential returns per unit of risk. Alliance Entertainment Holding is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 328.00 in Alliance Entertainment Holding on August 27, 2024 and sell it today you would earn a total of 172.00 from holding Alliance Entertainment Holding or generate 52.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. Alliance Entertainment Holding
Performance |
| Timeline |
| Alaska Air Group |
| Alliance Entertainment |
Alaska Air and Alliance Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and Alliance Entertainment
The main advantage of trading using opposite Alaska Air and Alliance Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Alliance Entertainment can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Alliance Entertainment will offset losses from the drop in Alliance Entertainment's long position.| Alaska Air vs. Delta Air Lines | Alaska Air vs. United Airlines Holdings | Alaska Air vs. American Airlines Group | Alaska Air vs. JetBlue Airways Corp |
| Alliance Entertainment vs. Porvair plc | Alliance Entertainment vs. United States Steel | Alliance Entertainment vs. Alaska Air Group | Alliance Entertainment vs. Pentair PLC |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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