Correlation Between Air France and Alaska Air
Can any of the company-specific risk be diversified away by investing in both Air France and Alaska Air 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 Air France and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air France KLM and Alaska Air Group, you can compare the effects of market volatilities on Air France and Alaska Air 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 Air France with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air France and Alaska Air.
Diversification Opportunities for Air France and Alaska Air
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Alaska is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Air France KLM and Alaska Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group and Air France 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 Air France KLM are associated (or correlated) with Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group has no effect on the direction of Air France i.e., Air France and Alaska Air go up and down completely randomly.
Pair Corralation between Air France and Alaska Air
Assuming the 90 days horizon Air France KLM is expected to under-perform the Alaska Air. In addition to that, Air France is 1.25 times more volatile than Alaska Air Group. It trades about -0.33 of its total potential returns per unit of risk. Alaska Air Group is currently generating about 0.24 per unit of volatility. If you would invest 4,727 in Alaska Air Group on August 31, 2024 and sell it today you would earn a total of 541.00 from holding Alaska Air Group or generate 11.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air France KLM vs. Alaska Air Group
Performance |
| Timeline |
| Air France KLM |
| Alaska Air Group |
Air France and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air France and Alaska Air
The main advantage of trading using opposite Air France and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air France position performs unexpectedly, Alaska Air 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 Alaska Air will offset losses from the drop in Alaska Air's long position.| Air France vs. Seychelle Environmtl | Air France vs. Energy and Water | Air France vs. One World Universe | Air France vs. Vow ASA |
| Alaska Air vs. JetBlue Airways Corp | Alaska Air vs. Allegiant Travel | Alaska Air vs. SkyWest | Alaska Air vs. Air Transport Services |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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