Correlation Between Paiute Oil and Alaska Air

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

By analyzing existing cross correlation between Paiute Oil Mining and Alaska Air Group, you can compare the effects of market volatilities on Paiute Oil 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 Paiute Oil with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paiute Oil and Alaska Air.

Diversification Opportunities for Paiute Oil and Alaska Air

0.0

Correlation Coefficient

Paiute Oil  Alaska Air

Pay attention - limited upside

The 3 months correlation between Paiute and Alaska is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Paiute Oil Mining 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 Paiute Oil 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 Paiute Oil Mining 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 Paiute Oil i.e., Paiute Oil and Alaska Air go up and down completely randomly.

Pair Corralation between Paiute Oil and Alaska Air

Assuming the 90 days horizon Paiute Oil Mining is expected to generate 33.79 times more return on investment than Alaska Air. However, Paiute Oil is 33.79 times more volatile than Alaska Air Group. It trades about 0.07 of its potential returns per unit of risk. Alaska Air Group is currently generating about 0.03 per unit of risk. If you would invest  0.00  in Paiute Oil Mining on August 15, 2024 and sell it today you would earn a total of  0.01  from holding Paiute Oil Mining or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.73%
Values	Daily Returns

Paiute Oil Mining  vs.  Alaska Air Group

Paiute Oil Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paiute Oil Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Paiute Oil is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Alaska Air Group

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Alaska Air disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Paiute Oil and Alaska Air

The main advantage of trading using opposite Paiute Oil and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paiute Oil 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.

The idea behind Paiute Oil Mining and Alaska Air Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.