Correlation Between Alaska Air and Old Market

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

Diversification Opportunities for Alaska Air and Old Market

-0.53

Correlation Coefficient

Alaska Air  Old Market

Excellent diversification

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

Pair Corralation between Alaska Air and Old Market

Considering the 90-day investment horizon Alaska Air Group is expected to generate 1.11 times more return on investment than Old Market. However, Alaska Air is 1.11 times more volatile than Old Market Capital. It trades about 0.26 of its potential returns per unit of risk. Old Market Capital is currently generating about 0.0 per unit of risk. If you would invest  4,134  in Alaska Air Group on September 15, 2024 and sell it today you would earn a total of  2,123  from holding Alaska Air Group or generate 51.35% 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.  Old Market Capital

Alaska Air Group

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal essential indicators, Alaska Air disclosed solid returns over the last few months and may actually be approaching a breakup point.

Old Market Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Old Market Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Old Market is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alaska Air and Old Market

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

The idea behind Alaska Air Group and Old Market Capital 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.