Correlation Between Alaska Air and BEST
Can any of the company-specific risk be diversified away by investing in both Alaska Air and BEST 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 BEST 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 BEST Inc, you can compare the effects of market volatilities on Alaska Air and BEST 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 BEST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and BEST.
Diversification Opportunities for Alaska Air and BEST
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alaska and BEST is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and BEST Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEST Inc 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 BEST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEST Inc has no effect on the direction of Alaska Air i.e., Alaska Air and BEST go up and down completely randomly.
Pair Corralation between Alaska Air and BEST
Considering the 90-day investment horizon Alaska Air Group is expected to generate 5.44 times more return on investment than BEST. However, Alaska Air is 5.44 times more volatile than BEST Inc. It trades about 0.3 of its potential returns per unit of risk. BEST Inc is currently generating about -0.14 per unit of risk. If you would invest 3,590 in Alaska Air Group on August 31, 2024 and sell it today you would earn a total of 1,678 from holding Alaska Air Group or generate 46.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. BEST Inc
Performance |
| Timeline |
| Alaska Air Group |
| BEST Inc |
Alaska Air and BEST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and BEST
The main advantage of trading using opposite Alaska Air and BEST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, BEST 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 BEST will offset losses from the drop in BEST's long position.| Alaska Air vs. JetBlue Airways Corp | Alaska Air vs. Allegiant Travel | Alaska Air vs. SkyWest | Alaska Air vs. Air Transport Services |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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