Correlation Between Alaska Air and General Mills
Can any of the company-specific risk be diversified away by investing in both Alaska Air and General Mills 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 General Mills 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 General Mills, you can compare the effects of market volatilities on Alaska Air and General Mills 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 General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and General Mills.
Diversification Opportunities for Alaska Air and General Mills
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alaska and General is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills 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 General Mills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Mills has no effect on the direction of Alaska Air i.e., Alaska Air and General Mills go up and down completely randomly.
Pair Corralation between Alaska Air and General Mills
Assuming the 90 days trading horizon Alaska Air Group is expected to generate 1.89 times more return on investment than General Mills. However, Alaska Air is 1.89 times more volatile than General Mills. It trades about 0.26 of its potential returns per unit of risk. General Mills is currently generating about -0.08 per unit of risk. If you would invest 4,863 in Alaska Air Group on September 12, 2024 and sell it today you would earn a total of 939.00 from holding Alaska Air Group or generate 19.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. General Mills
Performance |
| Timeline |
| Alaska Air Group |
| General Mills |
Alaska Air and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and General Mills
The main advantage of trading using opposite Alaska Air and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, General Mills 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 General Mills will offset losses from the drop in General Mills' long position.The idea behind Alaska Air Group and General Mills 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.| General Mills vs. WIZZ AIR HLDGUNSPADR4 | General Mills vs. INTER CARS SA | General Mills vs. Alaska Air Group | General Mills vs. Altair Engineering |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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