Correlation Between Alaska Air and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Alaska Air and SMA Solar 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 SMA Solar 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 SMA Solar Technology, you can compare the effects of market volatilities on Alaska Air and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and SMA Solar.
Diversification Opportunities for Alaska Air and SMA Solar
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alaska and SMA is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Alaska Air i.e., Alaska Air and SMA Solar go up and down completely randomly.
Pair Corralation between Alaska Air and SMA Solar
Assuming the 90 days trading horizon Alaska Air Group is expected to generate 0.43 times more return on investment than SMA Solar. However, Alaska Air Group is 2.35 times less risky than SMA Solar. It trades about 0.47 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.17 per unit of risk. If you would invest 6,198 in Alaska Air Group on November 7, 2024 and sell it today you would earn a total of 1,074 from holding Alaska Air Group or generate 17.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. SMA Solar Technology
Performance |
| Timeline |
| Alaska Air Group |
| SMA Solar Technology |
Alaska Air and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and SMA Solar
The main advantage of trading using opposite Alaska Air and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| Alaska Air vs. CN DATANG C | Alaska Air vs. Fidelity National Information | Alaska Air vs. DATADOT TECHNOLOGY | Alaska Air vs. Teradata Corp |
| SMA Solar vs. First Solar | SMA Solar vs. SolarEdge Technologies | SMA Solar vs. Xinyi Solar Holdings | SMA Solar vs. Sunrun Inc |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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