Correlation Between Alaska Air and Eco Animal
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Eco Animal 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 Alaska Air and Eco Animal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alaska Air Group and Eco Animal Health, you can compare the effects of market volatilities on Alaska Air and Eco Animal 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 Alaska Air with a short position of Eco Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Eco Animal.
Diversification Opportunities for Alaska Air and Eco Animal
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alaska and Eco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Eco Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Animal Health and Alaska Air 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 Alaska Air Group are associated (or correlated) with Eco Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Animal Health has no effect on the direction of Alaska Air i.e., Alaska Air and Eco Animal go up and down completely randomly.
Pair Corralation between Alaska Air and Eco Animal
Assuming the 90 days trading horizon Alaska Air Group is expected to generate 0.82 times more return on investment than Eco Animal. However, Alaska Air Group is 1.23 times less risky than Eco Animal. It trades about 0.3 of its potential returns per unit of risk. Eco Animal Health is currently generating about 0.04 per unit of risk. If you would invest 4,190 in Alaska Air Group on October 7, 2024 and sell it today you would earn a total of 2,162 from holding Alaska Air Group or generate 51.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 98.44% |
Values | Daily Returns |
Alaska Air Group vs. Eco Animal Health
Performance |
Timeline |
Alaska Air Group |
Eco Animal Health |
Alaska Air and Eco Animal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alaska Air and Eco Animal
The main advantage of trading using opposite Alaska Air and Eco Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Eco Animal 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 Eco Animal will offset losses from the drop in Eco Animal's long position.Alaska Air vs. Clean Power Hydrogen | Alaska Air vs. Summit Materials Cl | Alaska Air vs. Applied Materials | Alaska Air vs. BE Semiconductor Industries |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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