Correlation Between Alaska Air and Montauk Renewables
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Montauk Renewables 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 Montauk Renewables 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 Montauk Renewables, you can compare the effects of market volatilities on Alaska Air and Montauk Renewables 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 Montauk Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Montauk Renewables.
Diversification Opportunities for Alaska Air and Montauk Renewables
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Alaska and Montauk is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Montauk Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montauk Renewables 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 Montauk Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montauk Renewables has no effect on the direction of Alaska Air i.e., Alaska Air and Montauk Renewables go up and down completely randomly.
Pair Corralation between Alaska Air and Montauk Renewables
Considering the 90-day investment horizon Alaska Air Group is expected to generate 0.36 times more return on investment than Montauk Renewables. However, Alaska Air Group is 2.78 times less risky than Montauk Renewables. It trades about 0.22 of its potential returns per unit of risk. Montauk Renewables is currently generating about -0.15 per unit of risk. If you would invest 4,791 in Alaska Air Group on September 1, 2024 and sell it today you would earn a total of 469.00 from holding Alaska Air Group or generate 9.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. Montauk Renewables
Performance |
| Timeline |
| Alaska Air Group |
| Montauk Renewables |
Alaska Air and Montauk Renewables Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and Montauk Renewables
The main advantage of trading using opposite Alaska Air and Montauk Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Montauk Renewables 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 Montauk Renewables will offset losses from the drop in Montauk Renewables' long position.| Alaska Air vs. Canadian Pacific Railway | Alaska Air vs. Volaris | Alaska Air vs. Werner Enterprises | Alaska Air vs. Canadian National Railway |
| Montauk Renewables vs. Avista | Montauk Renewables vs. Allete Inc | Montauk Renewables vs. Black Hills | Montauk Renewables vs. Companhia Paranaense de |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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