Correlation Between Alaska Air and EAT WELL
Can any of the company-specific risk be diversified away by investing in both Alaska Air and EAT WELL 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 EAT WELL 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 EAT WELL INVESTMENT, you can compare the effects of market volatilities on Alaska Air and EAT WELL 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 EAT WELL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and EAT WELL.
Diversification Opportunities for Alaska Air and EAT WELL
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alaska and EAT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and EAT WELL INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAT WELL INVESTMENT 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 EAT WELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAT WELL INVESTMENT has no effect on the direction of Alaska Air i.e., Alaska Air and EAT WELL go up and down completely randomly.
Pair Corralation between Alaska Air and EAT WELL
Assuming the 90 days trading horizon Alaska Air Group is expected to generate 0.68 times more return on investment than EAT WELL. However, Alaska Air Group is 1.48 times less risky than EAT WELL. It trades about 0.02 of its potential returns per unit of risk. EAT WELL INVESTMENT is currently generating about 0.01 per unit of risk. If you would invest 4,291 in Alaska Air Group on September 4, 2024 and sell it today you would earn a total of 686.00 from holding Alaska Air Group or generate 15.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. EAT WELL INVESTMENT
Performance |
| Timeline |
| Alaska Air Group |
| EAT WELL INVESTMENT |
Alaska Air and EAT WELL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and EAT WELL
The main advantage of trading using opposite Alaska Air and EAT WELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, EAT WELL 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 EAT WELL will offset losses from the drop in EAT WELL's long position.The idea behind Alaska Air Group and EAT WELL INVESTMENT 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.| EAT WELL vs. Blackstone Group | EAT WELL vs. BlackRock | EAT WELL vs. The Bank of | EAT WELL vs. Ameriprise Financial |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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