Correlation Between Cedar Realty and Alaska Air
Can any of the company-specific risk be diversified away by investing in both Cedar Realty 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 Cedar Realty and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cedar Realty Trust and Alaska Air Group, you can compare the effects of market volatilities on Cedar Realty 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 Cedar Realty with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cedar Realty and Alaska Air.
Diversification Opportunities for Cedar Realty and Alaska Air
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cedar and Alaska is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Realty Trust 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 Cedar Realty 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 Cedar Realty Trust 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 Cedar Realty i.e., Cedar Realty and Alaska Air go up and down completely randomly.
Pair Corralation between Cedar Realty and Alaska Air
Assuming the 90 days trading horizon Cedar Realty Trust is expected to generate 1.33 times more return on investment than Alaska Air. However, Cedar Realty is 1.33 times more volatile than Alaska Air Group. It trades about 0.05 of its potential returns per unit of risk. Alaska Air Group is currently generating about 0.02 per unit of risk. If you would invest 1,131 in Cedar Realty Trust on August 31, 2024 and sell it today you would earn a total of 507.00 from holding Cedar Realty Trust or generate 44.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cedar Realty Trust vs. Alaska Air Group
Performance |
| Timeline |
| Cedar Realty Trust |
| Alaska Air Group |
Cedar Realty and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cedar Realty and Alaska Air
The main advantage of trading using opposite Cedar Realty and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cedar Realty 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.| Cedar Realty vs. Saul Centers | Cedar Realty vs. Kimco Realty | Cedar Realty vs. Wheeler Real Estate | Cedar Realty vs. Macerich Company |
| Alaska Air vs. JetBlue Airways Corp | Alaska Air vs. Allegiant Travel | Alaska Air vs. SkyWest | Alaska Air vs. Air Transport Services |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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