Correlation Between Alaska Air and Etsy
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Etsy 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 Etsy 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 Etsy Inc, you can compare the effects of market volatilities on Alaska Air and Etsy 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 Etsy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Etsy.
Diversification Opportunities for Alaska Air and Etsy
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alaska and Etsy is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Etsy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etsy Inc 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 Etsy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etsy Inc has no effect on the direction of Alaska Air i.e., Alaska Air and Etsy go up and down completely randomly.
Pair Corralation between Alaska Air and Etsy
Assuming the 90 days trading horizon Alaska Air Group is expected to generate 0.82 times more return on investment than Etsy. However, Alaska Air Group is 1.22 times less risky than Etsy. It trades about 0.02 of its potential returns per unit of risk. Etsy Inc is currently generating about -0.03 per unit of risk. If you would invest 4,874 in Alaska Air Group on August 31, 2024 and sell it today you would earn a total of 391.00 from holding Alaska Air Group or generate 8.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. Etsy Inc
Performance |
| Timeline |
| Alaska Air Group |
| Etsy Inc |
Alaska Air and Etsy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and Etsy
The main advantage of trading using opposite Alaska Air and Etsy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Etsy 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 Etsy will offset losses from the drop in Etsy's long position.| Alaska Air vs. Neometals | Alaska Air vs. Coor Service Management | Alaska Air vs. Aeorema Communications Plc | Alaska Air vs. JLEN Environmental Assets |
| Etsy vs. Norwegian Air Shuttle | Etsy vs. Pentair PLC | Etsy vs. Air Products Chemicals | Etsy vs. Alaska Air Group |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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