Correlation Between Spirit Airlines and Aluminum
Can any of the company-specific risk be diversified away by investing in both Spirit Airlines and Aluminum 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 Spirit Airlines and Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirit Airlines and Aluminum of, you can compare the effects of market volatilities on Spirit Airlines and Aluminum 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 Spirit Airlines with a short position of Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirit Airlines and Aluminum.
Diversification Opportunities for Spirit Airlines and Aluminum
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Spirit and Aluminum is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Spirit Airlines and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminum and Spirit Airlines 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 Spirit Airlines are associated (or correlated) with Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminum has no effect on the direction of Spirit Airlines i.e., Spirit Airlines and Aluminum go up and down completely randomly.
Pair Corralation between Spirit Airlines and Aluminum
Assuming the 90 days horizon Spirit Airlines is expected to under-perform the Aluminum. In addition to that, Spirit Airlines is 3.13 times more volatile than Aluminum of. It trades about -0.01 of its total potential returns per unit of risk. Aluminum of is currently generating about 0.08 per unit of volatility. If you would invest 47.00 in Aluminum of on November 2, 2024 and sell it today you would earn a total of 13.00 from holding Aluminum of or generate 27.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.23% |
| Values | Daily Returns |
Spirit Airlines vs. Aluminum of
Performance |
| Timeline |
| Spirit Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Aluminum |
Spirit Airlines and Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirit Airlines and Aluminum
The main advantage of trading using opposite Spirit Airlines and Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirit Airlines position performs unexpectedly, Aluminum 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 Aluminum will offset losses from the drop in Aluminum's long position.| Spirit Airlines vs. Tokyu Construction Co | Spirit Airlines vs. China Railway Construction | Spirit Airlines vs. Gaztransport Technigaz SA | Spirit Airlines vs. USWE SPORTS AB |
| Aluminum vs. Strategic Education | Aluminum vs. NH HOTEL GROUP | Aluminum vs. Choice Hotels International | Aluminum vs. TAL Education Group |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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