Correlation Between Alaska Air and Sabien Technology
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Sabien Technology 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 Sabien Technology 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 Sabien Technology Group, you can compare the effects of market volatilities on Alaska Air and Sabien Technology 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 Sabien Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Sabien Technology.
Diversification Opportunities for Alaska Air and Sabien Technology
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alaska and Sabien is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Sabien Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabien Technology 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 Sabien Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabien Technology has no effect on the direction of Alaska Air i.e., Alaska Air and Sabien Technology go up and down completely randomly.
Pair Corralation between Alaska Air and Sabien Technology
Assuming the 90 days trading horizon Alaska Air Group is expected to generate 0.68 times more return on investment than Sabien Technology. However, Alaska Air Group is 1.48 times less risky than Sabien Technology. It trades about 0.1 of its potential returns per unit of risk. Sabien Technology Group is currently generating about -0.28 per unit of risk. If you would invest 6,721 in Alaska Air Group on October 26, 2024 and sell it today you would earn a total of 211.00 from holding Alaska Air Group or generate 3.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.0% |
Values | Daily Returns |
Alaska Air Group vs. Sabien Technology Group
Performance |
Timeline |
Alaska Air Group |
Sabien Technology |
Alaska Air and Sabien Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alaska Air and Sabien Technology
The main advantage of trading using opposite Alaska Air and Sabien Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Sabien Technology 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 Sabien Technology will offset losses from the drop in Sabien Technology's long position.Alaska Air vs. Berkshire Hathaway | Alaska Air vs. Samsung Electronics Co | Alaska Air vs. Samsung Electronics Co | Alaska Air vs. Chocoladefabriken Lindt Spruengli |
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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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