Correlation Between Icelandair Group and Alvotech
Can any of the company-specific risk be diversified away by investing in both Icelandair Group and Alvotech 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 Icelandair Group and Alvotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Icelandair Group hf and Alvotech, you can compare the effects of market volatilities on Icelandair Group and Alvotech 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 Icelandair Group with a short position of Alvotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icelandair Group and Alvotech.
Diversification Opportunities for Icelandair Group and Alvotech
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Icelandair and Alvotech is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Icelandair Group hf and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and Icelandair Group 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 Icelandair Group hf are associated (or correlated) with Alvotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alvotech has no effect on the direction of Icelandair Group i.e., Icelandair Group and Alvotech go up and down completely randomly.
Pair Corralation between Icelandair Group and Alvotech
Assuming the 90 days trading horizon Icelandair Group hf is expected to generate 1.28 times more return on investment than Alvotech. However, Icelandair Group is 1.28 times more volatile than Alvotech. It trades about 0.14 of its potential returns per unit of risk. Alvotech is currently generating about -0.18 per unit of risk. If you would invest 108.00 in Icelandair Group hf on August 28, 2024 and sell it today you would earn a total of 7.00 from holding Icelandair Group hf or generate 6.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icelandair Group hf vs. Alvotech
Performance |
| Timeline |
| Icelandair Group |
| Alvotech |
Icelandair Group and Alvotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icelandair Group and Alvotech
The main advantage of trading using opposite Icelandair Group and Alvotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icelandair Group position performs unexpectedly, Alvotech 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 Alvotech will offset losses from the drop in Alvotech's long position.| Icelandair Group vs. Icelandic Salmon AS | Icelandair Group vs. lgerin Egill Skallagrmsson | Icelandair Group vs. Fly Play hf | Icelandair Group vs. Oculis Holding AG |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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