Correlation Between Assured Guaranty and Alaska Air
Can any of the company-specific risk be diversified away by investing in both Assured Guaranty 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 Assured Guaranty and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Assured Guaranty and Alaska Air Group, you can compare the effects of market volatilities on Assured Guaranty 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 Assured Guaranty with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assured Guaranty and Alaska Air.
Diversification Opportunities for Assured Guaranty and Alaska Air
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Assured and Alaska is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Assured Guaranty 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 Assured Guaranty 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 Assured Guaranty 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 Assured Guaranty i.e., Assured Guaranty and Alaska Air go up and down completely randomly.
Pair Corralation between Assured Guaranty and Alaska Air
Assuming the 90 days horizon Assured Guaranty is expected to generate 2.0 times more return on investment than Alaska Air. However, Assured Guaranty is 2.0 times more volatile than Alaska Air Group. It trades about 0.13 of its potential returns per unit of risk. Alaska Air Group is currently generating about 0.07 per unit of risk. If you would invest 8,400 in Assured Guaranty on October 23, 2024 and sell it today you would earn a total of 500.00 from holding Assured Guaranty or generate 5.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
Assured Guaranty vs. Alaska Air Group
Performance |
| Timeline |
| Assured Guaranty |
| Alaska Air Group |
Assured Guaranty and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Assured Guaranty and Alaska Air
The main advantage of trading using opposite Assured Guaranty and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assured Guaranty 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.| Assured Guaranty vs. Thai Beverage Public | Assured Guaranty vs. Chiba Bank | Assured Guaranty vs. THAI BEVERAGE | Assured Guaranty vs. United Insurance Holdings |
| Alaska Air vs. CDN IMPERIAL BANK | Alaska Air vs. Virtu Financial | Alaska Air vs. Synovus Financial Corp | Alaska Air vs. BW OFFSHORE LTD |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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