Correlation Between Alaska Air and Tamboran Resources
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Tamboran Resources 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 Tamboran Resources 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 Tamboran Resources, you can compare the effects of market volatilities on Alaska Air and Tamboran Resources 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 Tamboran Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Tamboran Resources.
Diversification Opportunities for Alaska Air and Tamboran Resources
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alaska and Tamboran is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Tamboran Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamboran Resources 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 Tamboran Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamboran Resources has no effect on the direction of Alaska Air i.e., Alaska Air and Tamboran Resources go up and down completely randomly.
Pair Corralation between Alaska Air and Tamboran Resources
Considering the 90-day investment horizon Alaska Air Group is expected to generate 0.98 times more return on investment than Tamboran Resources. However, Alaska Air Group is 1.02 times less risky than Tamboran Resources. It trades about 0.29 of its potential returns per unit of risk. Tamboran Resources is currently generating about -0.09 per unit of risk. If you would invest 3,612 in Alaska Air Group on September 4, 2024 and sell it today you would earn a total of 1,643 from holding Alaska Air Group or generate 45.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Alaska Air Group vs. Tamboran Resources
Performance |
Timeline |
Alaska Air Group |
Tamboran Resources |
Alaska Air and Tamboran Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alaska Air and Tamboran Resources
The main advantage of trading using opposite Alaska Air and Tamboran Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Tamboran Resources 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 Tamboran Resources will offset losses from the drop in Tamboran Resources' long position.Alaska Air vs. Delta Air Lines | Alaska Air vs. United Airlines Holdings | Alaska Air vs. Frontier Group Holdings |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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