Correlation Between Alaska Air and AlphaTime Acquisition
Can any of the company-specific risk be diversified away by investing in both Alaska Air and AlphaTime Acquisition 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 AlphaTime Acquisition 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 AlphaTime Acquisition Corp, you can compare the effects of market volatilities on Alaska Air and AlphaTime Acquisition 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 AlphaTime Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and AlphaTime Acquisition.
Diversification Opportunities for Alaska Air and AlphaTime Acquisition
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alaska and AlphaTime is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and AlphaTime Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlphaTime Acquisition 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 AlphaTime Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlphaTime Acquisition has no effect on the direction of Alaska Air i.e., Alaska Air and AlphaTime Acquisition go up and down completely randomly.
Pair Corralation between Alaska Air and AlphaTime Acquisition
Considering the 90-day investment horizon Alaska Air Group is expected to generate 0.49 times more return on investment than AlphaTime Acquisition. However, Alaska Air Group is 2.03 times less risky than AlphaTime Acquisition. It trades about 0.31 of its potential returns per unit of risk. AlphaTime Acquisition Corp is currently generating about -0.33 per unit of risk. If you would invest 5,167 in Alaska Air Group on September 14, 2024 and sell it today you would earn a total of 1,175 from holding Alaska Air Group or generate 22.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 23.81% |
| Values | Daily Returns |
Alaska Air Group vs. AlphaTime Acquisition Corp
Performance |
| Timeline |
| Alaska Air Group |
| AlphaTime Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Alaska Air and AlphaTime Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and AlphaTime Acquisition
The main advantage of trading using opposite Alaska Air and AlphaTime Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, AlphaTime Acquisition 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 AlphaTime Acquisition will offset losses from the drop in AlphaTime Acquisition's long position.| Alaska Air vs. American Airlines Group | Alaska Air vs. Southwest Airlines | Alaska Air vs. United Airlines Holdings | Alaska Air vs. Frontier Group Holdings |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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