Correlation Between Alaska Air and Australian Oilseeds
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Australian Oilseeds 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 Australian Oilseeds 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 Australian Oilseeds Holdings, you can compare the effects of market volatilities on Alaska Air and Australian Oilseeds 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 Australian Oilseeds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Australian Oilseeds.
Diversification Opportunities for Alaska Air and Australian Oilseeds
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alaska and Australian is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Australian Oilseeds Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Oilseeds 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 Australian Oilseeds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Oilseeds has no effect on the direction of Alaska Air i.e., Alaska Air and Australian Oilseeds go up and down completely randomly.
Pair Corralation between Alaska Air and Australian Oilseeds
Considering the 90-day investment horizon Alaska Air Group is expected to generate 0.43 times more return on investment than Australian Oilseeds. However, Alaska Air Group is 2.3 times less risky than Australian Oilseeds. It trades about 0.05 of its potential returns per unit of risk. Australian Oilseeds Holdings is currently generating about -0.06 per unit of risk. If you would invest 4,226 in Alaska Air Group on September 15, 2024 and sell it today you would earn a total of 2,031 from holding Alaska Air Group or generate 48.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. Australian Oilseeds Holdings
Performance |
| Timeline |
| Alaska Air Group |
| Australian Oilseeds |
Alaska Air and Australian Oilseeds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and Australian Oilseeds
The main advantage of trading using opposite Alaska Air and Australian Oilseeds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Australian Oilseeds 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 Australian Oilseeds will offset losses from the drop in Australian Oilseeds' long position.| Alaska Air vs. Southwest Airlines | Alaska Air vs. United Airlines Holdings | Alaska Air vs. Frontier Group Holdings |
| Australian Oilseeds vs. Merit Medical Systems | Australian Oilseeds vs. LENSAR Inc | Australian Oilseeds vs. Air Products and | Australian Oilseeds vs. Delek Drilling |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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