Correlation Between Alaska Air and EMCOR
Can any of the company-specific risk be diversified away by investing in both Alaska Air and EMCOR 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 EMCOR 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 EMCOR Group, you can compare the effects of market volatilities on Alaska Air and EMCOR 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 EMCOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and EMCOR.
Diversification Opportunities for Alaska Air and EMCOR
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alaska and EMCOR is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group 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 EMCOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCOR Group has no effect on the direction of Alaska Air i.e., Alaska Air and EMCOR go up and down completely randomly.
Pair Corralation between Alaska Air and EMCOR
Considering the 90-day investment horizon Alaska Air Group is expected to under-perform the EMCOR. But the stock apears to be less risky and, when comparing its historical volatility, Alaska Air Group is 1.32 times less risky than EMCOR. The stock trades about -0.06 of its potential returns per unit of risk. The EMCOR Group is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 46,303 in EMCOR Group on October 23, 2024 and sell it today you would earn a total of 4,344 from holding EMCOR Group or generate 9.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Alaska Air Group vs. EMCOR Group
Performance |
Timeline |
Alaska Air Group |
EMCOR Group |
Alaska Air and EMCOR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alaska Air and EMCOR
The main advantage of trading using opposite Alaska Air and EMCOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, EMCOR 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 EMCOR will offset losses from the drop in EMCOR's long position.Alaska Air vs. Delta Air Lines | Alaska Air vs. United Airlines Holdings | Alaska Air vs. American Airlines Group | Alaska Air vs. JetBlue Airways Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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