Correlation Between ASOS Plc and Alaska Air
Can any of the company-specific risk be diversified away by investing in both ASOS Plc and Alaska Air 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 ASOS Plc and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASOS Plc and Alaska Air Group, you can compare the effects of market volatilities on ASOS Plc and Alaska Air 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 ASOS Plc with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASOS Plc and Alaska Air.
Diversification Opportunities for ASOS Plc and Alaska Air
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ASOS and Alaska is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ASOS Plc and Alaska Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group and ASOS Plc 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 ASOS Plc are associated (or correlated) with Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group has no effect on the direction of ASOS Plc i.e., ASOS Plc and Alaska Air go up and down completely randomly.
Pair Corralation between ASOS Plc and Alaska Air
Assuming the 90 days trading horizon ASOS Plc is expected to under-perform the Alaska Air. In addition to that, ASOS Plc is 1.4 times more volatile than Alaska Air Group. It trades about 0.0 of its total potential returns per unit of risk. Alaska Air Group is currently generating about 0.05 per unit of volatility. If you would invest 6,691 in Alaska Air Group on October 24, 2024 and sell it today you would earn a total of 104.00 from holding Alaska Air Group or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
ASOS Plc vs. Alaska Air Group
Performance |
| Timeline |
| ASOS Plc |
| Alaska Air Group |
ASOS Plc and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASOS Plc and Alaska Air
The main advantage of trading using opposite ASOS Plc and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASOS Plc position performs unexpectedly, Alaska Air 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 Alaska Air will offset losses from the drop in Alaska Air's long position.| ASOS Plc vs. Berner Kantonalbank AG | ASOS Plc vs. First Class Metals | ASOS Plc vs. Jacquet Metal Service | ASOS Plc vs. SoftBank Group Corp |
| Alaska Air vs. British American Tobacco | Alaska Air vs. Extra Space Storage | Alaska Air vs. Advanced Medical Solutions | Alaska Air vs. Rosslyn Data Technologies |
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.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |