Correlation Between Zegona Communications and Alaska Air
Can any of the company-specific risk be diversified away by investing in both Zegona Communications 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 Zegona Communications and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zegona Communications Plc and Alaska Air Group, you can compare the effects of market volatilities on Zegona Communications 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 Zegona Communications with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and Alaska Air.
Diversification Opportunities for Zegona Communications and Alaska Air
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Zegona and Alaska is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc 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 Zegona Communications 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 Zegona Communications Plc 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 Zegona Communications i.e., Zegona Communications and Alaska Air go up and down completely randomly.
Pair Corralation between Zegona Communications and Alaska Air
Assuming the 90 days trading horizon Zegona Communications is expected to generate 2.08 times less return on investment than Alaska Air. But when comparing it to its historical volatility, Zegona Communications Plc is 1.24 times less risky than Alaska Air. It trades about 0.15 of its potential returns per unit of risk. Alaska Air Group is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 5,187 in Alaska Air Group on September 12, 2024 and sell it today you would earn a total of 901.00 from holding Alaska Air Group or generate 17.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zegona Communications Plc vs. Alaska Air Group
Performance |
| Timeline |
| Zegona Communications Plc |
| Alaska Air Group |
Zegona Communications and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zegona Communications and Alaska Air
The main advantage of trading using opposite Zegona Communications and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zegona Communications 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.| Zegona Communications vs. Catalyst Media Group | Zegona Communications vs. CATLIN GROUP | Zegona Communications vs. Tamburi Investment Partners | Zegona Communications vs. Magnora ASA |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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