Correlation Between Alaska Air and 26884ABN2

Can any of the company-specific risk be diversified away by investing in both Alaska Air and 26884ABN2 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 26884ABN2 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 EQR 185 01 AUG 31, you can compare the effects of market volatilities on Alaska Air and 26884ABN2 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 26884ABN2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and 26884ABN2.

Diversification Opportunities for Alaska Air and 26884ABN2

-0.67

Correlation Coefficient

Alaska Air  26884ABN2

Excellent diversification

The 3 months correlation between Alaska and 26884ABN2 is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and EQR 185 01 AUG 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQR 185 01 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 26884ABN2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQR 185 01 has no effect on the direction of Alaska Air i.e., Alaska Air and 26884ABN2 go up and down completely randomly.

Pair Corralation between Alaska Air and 26884ABN2

Considering the 90-day investment horizon Alaska Air Group is expected to generate 3.68 times more return on investment than 26884ABN2. However, Alaska Air is 3.68 times more volatile than EQR 185 01 AUG 31. It trades about 0.09 of its potential returns per unit of risk. EQR 185 01 AUG 31 is currently generating about 0.02 per unit of risk. If you would invest  3,575  in Alaska Air Group on September 4, 2024 and sell it today you would earn a total of  1,680  from holding Alaska Air Group or generate 46.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	89.47%
Values	Daily Returns

Alaska Air Group  vs.  EQR 185 01 AUG 31

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. Despite quite conflicting essential indicators, Alaska Air disclosed solid returns over the last few months and may actually be approaching a breakup point.

EQR 185 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EQR 185 01 AUG 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26884ABN2 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alaska Air and 26884ABN2

The main advantage of trading using opposite Alaska Air and 26884ABN2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, 26884ABN2 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 26884ABN2 will offset losses from the drop in 26884ABN2's long position.

The idea behind Alaska Air Group and EQR 185 01 AUG 31 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.