Correlation Between Alaska Air and WILLIS LEASE
Can any of the company-specific risk be diversified away by investing in both Alaska Air and WILLIS LEASE 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 WILLIS LEASE 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 WILLIS LEASE FIN, you can compare the effects of market volatilities on Alaska Air and WILLIS LEASE 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 WILLIS LEASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and WILLIS LEASE.
Diversification Opportunities for Alaska Air and WILLIS LEASE
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alaska and WILLIS is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and WILLIS LEASE FIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WILLIS LEASE FIN 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 WILLIS LEASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WILLIS LEASE FIN has no effect on the direction of Alaska Air i.e., Alaska Air and WILLIS LEASE go up and down completely randomly.
Pair Corralation between Alaska Air and WILLIS LEASE
Assuming the 90 days trading horizon Alaska Air Group is expected to generate 0.66 times more return on investment than WILLIS LEASE. However, Alaska Air Group is 1.53 times less risky than WILLIS LEASE. It trades about 0.08 of its potential returns per unit of risk. WILLIS LEASE FIN is currently generating about -0.06 per unit of risk. If you would invest 6,360 in Alaska Air Group on October 25, 2024 and sell it today you would earn a total of 124.00 from holding Alaska Air Group or generate 1.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. WILLIS LEASE FIN
Performance |
| Timeline |
| Alaska Air Group |
| WILLIS LEASE FIN |
Alaska Air and WILLIS LEASE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and WILLIS LEASE
The main advantage of trading using opposite Alaska Air and WILLIS LEASE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, WILLIS LEASE 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 WILLIS LEASE will offset losses from the drop in WILLIS LEASE's long position.| Alaska Air vs. MAVEN WIRELESS SWEDEN | Alaska Air vs. Genertec Universal Medical | Alaska Air vs. Tower One Wireless | Alaska Air vs. Highlight Communications AG |
| WILLIS LEASE vs. United Rentals | WILLIS LEASE vs. WillScot Mobile Mini | WILLIS LEASE vs. Avis Budget Group | WILLIS LEASE vs. ALD SA |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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