Correlation Between AOYAMA TRADING and Alaska Air
Can any of the company-specific risk be diversified away by investing in both AOYAMA TRADING 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 AOYAMA TRADING and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AOYAMA TRADING and Alaska Air Group, you can compare the effects of market volatilities on AOYAMA TRADING 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 AOYAMA TRADING with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of AOYAMA TRADING and Alaska Air.
Diversification Opportunities for AOYAMA TRADING and Alaska Air
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AOYAMA and Alaska is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding AOYAMA TRADING 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 AOYAMA TRADING 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 AOYAMA TRADING 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 AOYAMA TRADING i.e., AOYAMA TRADING and Alaska Air go up and down completely randomly.
Pair Corralation between AOYAMA TRADING and Alaska Air
Assuming the 90 days horizon AOYAMA TRADING is expected to generate 1.7 times more return on investment than Alaska Air. However, AOYAMA TRADING is 1.7 times more volatile than Alaska Air Group. It trades about 0.19 of its potential returns per unit of risk. Alaska Air Group is currently generating about 0.28 per unit of risk. If you would invest 840.00 in AOYAMA TRADING on September 17, 2024 and sell it today you would earn a total of 570.00 from holding AOYAMA TRADING or generate 67.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
AOYAMA TRADING vs. Alaska Air Group
Performance |
Timeline |
AOYAMA TRADING |
Alaska Air Group |
AOYAMA TRADING and Alaska Air Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AOYAMA TRADING and Alaska Air
The main advantage of trading using opposite AOYAMA TRADING and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AOYAMA TRADING 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.AOYAMA TRADING vs. Burlington Stores | AOYAMA TRADING vs. Caseys General Stores | AOYAMA TRADING vs. Ross Stores | AOYAMA TRADING vs. Columbia Sportswear |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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