Correlation Between Alaska Air and Biglari Holdings
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Biglari Holdings 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 Biglari Holdings 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 Biglari Holdings, you can compare the effects of market volatilities on Alaska Air and Biglari Holdings 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 Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Biglari Holdings.
Diversification Opportunities for Alaska Air and Biglari Holdings
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alaska and Biglari is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings 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 Biglari Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biglari Holdings has no effect on the direction of Alaska Air i.e., Alaska Air and Biglari Holdings go up and down completely randomly.
Pair Corralation between Alaska Air and Biglari Holdings
Considering the 90-day investment horizon Alaska Air is expected to generate 1.17 times less return on investment than Biglari Holdings. In addition to that, Alaska Air is 1.19 times more volatile than Biglari Holdings. It trades about 0.27 of its total potential returns per unit of risk. Biglari Holdings is currently generating about 0.38 per unit of volatility. If you would invest 18,548 in Biglari Holdings on September 13, 2024 and sell it today you would earn a total of 4,312 from holding Biglari Holdings or generate 23.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. Biglari Holdings
Performance |
| Timeline |
| Alaska Air Group |
| Biglari Holdings |
Alaska Air and Biglari Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and Biglari Holdings
The main advantage of trading using opposite Alaska Air and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Biglari Holdings 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 Biglari Holdings will offset losses from the drop in Biglari Holdings' 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 |
| Biglari Holdings vs. Cannae Holdings | Biglari Holdings vs. BJs Restaurants | Biglari Holdings vs. Ark Restaurants Corp | Biglari Holdings vs. Noble Romans |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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