Correlation Between Alaska Air and Delta Air
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Delta 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 Alaska Air and Delta Air 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 Delta Air Lines, you can compare the effects of market volatilities on Alaska Air and Delta 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 Alaska Air with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Delta Air.
Diversification Opportunities for Alaska Air and Delta Air
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alaska and Delta is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Delta Air Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Air Lines 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 Delta Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Air Lines has no effect on the direction of Alaska Air i.e., Alaska Air and Delta Air go up and down completely randomly.
Pair Corralation between Alaska Air and Delta Air
Considering the 90-day investment horizon Alaska Air Group is expected to generate 1.29 times more return on investment than Delta Air. However, Alaska Air is 1.29 times more volatile than Delta Air Lines. It trades about 0.29 of its potential returns per unit of risk. Delta Air Lines is currently generating about 0.23 per unit of risk. If you would invest 3,968 in Alaska Air Group on January 25, 2024 and sell it today you would earn a total of 540.00 from holding Alaska Air Group or generate 13.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. Delta Air Lines
Performance |
| Timeline |
| Alaska Air Group |
| Delta Air Lines |
Alaska Air and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and Delta Air
The main advantage of trading using opposite Alaska Air and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Delta 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 Delta Air will offset losses from the drop in Delta Air'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 |
| Delta Air vs. American Airlines Group | Delta Air vs. Southwest Airlines | Delta Air vs. JetBlue Airways Corp | Delta Air vs. Spirit Airlines |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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