Correlation Between European Metals and Alaska Air
Can any of the company-specific risk be diversified away by investing in both European Metals 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 European Metals and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Metals Holdings and Alaska Air Group, you can compare the effects of market volatilities on European Metals 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 European Metals with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Alaska Air.
Diversification Opportunities for European Metals and Alaska Air
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between European and Alaska is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings 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 European Metals 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 European Metals Holdings 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 European Metals i.e., European Metals and Alaska Air go up and down completely randomly.
Pair Corralation between European Metals and Alaska Air
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the Alaska Air. But the stock apears to be less risky and, when comparing its historical volatility, European Metals Holdings is 1.09 times less risky than Alaska Air. The stock trades about -0.42 of its potential returns per unit of risk. The Alaska Air Group is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 7,379 in Alaska Air Group on December 1, 2024 and sell it today you would lose (126.00) from holding Alaska Air Group or give up 1.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Metals Holdings vs. Alaska Air Group
Performance |
| Timeline |
| European Metals Holdings |
| Alaska Air Group |
European Metals and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Alaska Air
The main advantage of trading using opposite European Metals and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals 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.| European Metals vs. Ubisoft Entertainment | European Metals vs. Flutter Entertainment PLC | European Metals vs. Broadridge Financial Solutions | European Metals vs. Hochschild Mining plc |
| Alaska Air vs. Jupiter Fund Management | Alaska Air vs. PPHE Hotel Group | Alaska Air vs. Planet Fitness Cl | Alaska Air vs. CVS Health Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
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