Correlation Between Alaska Air and Public Company

Can any of the company-specific risk be diversified away by investing in both Alaska Air and Public Company 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 Public Company 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 Public Company Management, you can compare the effects of market volatilities on Alaska Air and Public Company 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 Public Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Public Company.

Diversification Opportunities for Alaska Air and Public Company

-0.58

Correlation Coefficient

Alaska Air  Public Company

Excellent diversification

The 3 months correlation between Alaska and Public is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Public Company Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Management 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 Public Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Management has no effect on the direction of Alaska Air i.e., Alaska Air and Public Company go up and down completely randomly.

Pair Corralation between Alaska Air and Public Company

If you would invest  3,878  in Alaska Air Group on January 20, 2024 and sell it today you would earn a total of  566.00  from holding Alaska Air Group or generate 14.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Alaska Air Group  vs.  Public Company Management

Alaska Air Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 16 (%) 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.

Public Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Public Company Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Alaska Air and Public Company

The main advantage of trading using opposite Alaska Air and Public Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Public Company 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 Public Company will offset losses from the drop in Public Company's long position.

The idea behind Alaska Air Group and Public Company Management 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.