Correlation Between Alaska Air and NioCorp Developments
Can any of the company-specific risk be diversified away by investing in both Alaska Air and NioCorp Developments 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 NioCorp Developments 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 NioCorp Developments Ltd, you can compare the effects of market volatilities on Alaska Air and NioCorp Developments 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 NioCorp Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and NioCorp Developments.
Diversification Opportunities for Alaska Air and NioCorp Developments
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alaska and NioCorp is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and NioCorp Developments Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NioCorp Developments 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 NioCorp Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NioCorp Developments has no effect on the direction of Alaska Air i.e., Alaska Air and NioCorp Developments go up and down completely randomly.
Pair Corralation between Alaska Air and NioCorp Developments
Considering the 90-day investment horizon Alaska Air Group is expected to generate 0.41 times more return on investment than NioCorp Developments. However, Alaska Air Group is 2.46 times less risky than NioCorp Developments. It trades about 0.08 of its potential returns per unit of risk. NioCorp Developments Ltd is currently generating about -0.04 per unit of risk. If you would invest 3,597 in Alaska Air Group on September 2, 2024 and sell it today you would earn a total of 1,663 from holding Alaska Air Group or generate 46.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. NioCorp Developments Ltd
Performance |
| Timeline |
| Alaska Air Group |
| NioCorp Developments |
Alaska Air and NioCorp Developments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and NioCorp Developments
The main advantage of trading using opposite Alaska Air and NioCorp Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, NioCorp Developments 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 NioCorp Developments will offset losses from the drop in NioCorp Developments' long position.| Alaska Air vs. Canadian Pacific Railway | Alaska Air vs. Werner Enterprises | Alaska Air vs. Canadian National Railway | Alaska Air vs. CSX Corporation |
| NioCorp Developments vs. Teck Resources Ltd | NioCorp Developments vs. Sigma Lithium Resources | NioCorp Developments vs. Vale SA ADR | NioCorp Developments vs. Sayona Mining Limited |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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