Correlation Between Alaska Energy and Tilray

Can any of the company-specific risk be diversified away by investing in both Alaska Energy and Tilray 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 Energy and Tilray into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alaska Energy Metals and Tilray Inc, you can compare the effects of market volatilities on Alaska Energy and Tilray 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 Energy with a short position of Tilray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Energy and Tilray.

Diversification Opportunities for Alaska Energy and Tilray

-0.16

Correlation Coefficient

Alaska Energy  Tilray

Good diversification

The 3 months correlation between Alaska and Tilray is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Energy Metals and Tilray Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tilray Inc and Alaska Energy 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 Energy Metals are associated (or correlated) with Tilray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tilray Inc has no effect on the direction of Alaska Energy i.e., Alaska Energy and Tilray go up and down completely randomly.

Pair Corralation between Alaska Energy and Tilray

Assuming the 90 days trading horizon Alaska Energy Metals is expected to generate 1.72 times more return on investment than Tilray. However, Alaska Energy is 1.72 times more volatile than Tilray Inc. It trades about 0.0 of its potential returns per unit of risk. Tilray Inc is currently generating about -0.2 per unit of risk. If you would invest  13.00  in Alaska Energy Metals on December 5, 2024 and sell it today you would lose (2.00) from holding Alaska Energy Metals or give up 15.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alaska Energy Metals  vs.  Tilray Inc

Alaska Energy Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alaska Energy Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, Alaska Energy is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Tilray Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tilray Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Alaska Energy and Tilray

The main advantage of trading using opposite Alaska Energy and Tilray positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Energy position performs unexpectedly, Tilray 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 Tilray will offset losses from the drop in Tilray's long position.

The idea behind Alaska Energy Metals and Tilray Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.