Correlation Between Alaska Air and HF SINCLAIR

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

Diversification Opportunities for Alaska Air and HF SINCLAIR

-0.53

Correlation Coefficient

Alaska Air  HF SINCLAIR

Excellent diversification

The 3 months correlation between Alaska and HL80 is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and HF SINCLAIR P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF SINCLAIR P 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 HF SINCLAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF SINCLAIR P has no effect on the direction of Alaska Air i.e., Alaska Air and HF SINCLAIR go up and down completely randomly.

Pair Corralation between Alaska Air and HF SINCLAIR

Assuming the 90 days trading horizon Alaska Air Group is expected to generate 1.6 times more return on investment than HF SINCLAIR. However, Alaska Air is 1.6 times more volatile than HF SINCLAIR P. It trades about 0.27 of its potential returns per unit of risk. HF SINCLAIR P is currently generating about 0.35 per unit of risk. If you would invest  4,375  in Alaska Air Group on September 5, 2024 and sell it today you would earn a total of  625.00  from holding Alaska Air Group or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Alaska Air Group  vs.  HF SINCLAIR P

Alaska Air Group

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alaska Air unveiled solid returns over the last few months and may actually be approaching a breakup point.

HF SINCLAIR P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HF SINCLAIR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HF SINCLAIR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Alaska Air and HF SINCLAIR

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

The idea behind Alaska Air Group and HF SINCLAIR P 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.