Correlation Between Alaska Air and BCB Bancorp
Can any of the company-specific risk be diversified away by investing in both Alaska Air and BCB Bancorp 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 BCB Bancorp 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 BCB Bancorp, you can compare the effects of market volatilities on Alaska Air and BCB Bancorp 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 BCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and BCB Bancorp.
Diversification Opportunities for Alaska Air and BCB Bancorp
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alaska and BCB is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB Bancorp 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 BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of Alaska Air i.e., Alaska Air and BCB Bancorp go up and down completely randomly.
Pair Corralation between Alaska Air and BCB Bancorp
Considering the 90-day investment horizon Alaska Air Group is expected to generate 2.59 times more return on investment than BCB Bancorp. However, Alaska Air is 2.59 times more volatile than BCB Bancorp. It trades about 0.27 of its potential returns per unit of risk. BCB Bancorp is currently generating about -0.17 per unit of risk. If you would invest 5,145 in Alaska Air Group on September 13, 2024 and sell it today you would earn a total of 984.00 from holding Alaska Air Group or generate 19.13% 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. BCB Bancorp
Performance |
| Timeline |
| Alaska Air Group |
| BCB Bancorp |
Alaska Air and BCB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and BCB Bancorp
The main advantage of trading using opposite Alaska Air and BCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, BCB Bancorp 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 BCB Bancorp will offset losses from the drop in BCB Bancorp's long position.| Alaska Air vs. Delta Air Lines | Alaska Air vs. United Airlines Holdings | Alaska Air vs. American Airlines Group | Alaska Air vs. JetBlue Airways Corp |
| BCB Bancorp vs. Provident Financial Services | BCB Bancorp vs. First Mid Illinois | BCB Bancorp vs. ConnectOne Bancorp | BCB Bancorp vs. Finward Bancorp |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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