Correlation Between Alaska Air and National Beverage
Can any of the company-specific risk be diversified away by investing in both Alaska Air and National Beverage 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 National Beverage 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 National Beverage Corp, you can compare the effects of market volatilities on Alaska Air and National Beverage 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 National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and National Beverage.
Diversification Opportunities for Alaska Air and National Beverage
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alaska and National is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp 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 National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Alaska Air i.e., Alaska Air and National Beverage go up and down completely randomly.
Pair Corralation between Alaska Air and National Beverage
Considering the 90-day investment horizon Alaska Air Group is expected to generate 1.24 times more return on investment than National Beverage. However, Alaska Air is 1.24 times more volatile than National Beverage Corp. It trades about 0.06 of its potential returns per unit of risk. National Beverage Corp is currently generating about 0.0 per unit of risk. If you would invest 4,295 in Alaska Air Group on September 12, 2024 and sell it today you would earn a total of 1,834 from holding Alaska Air Group or generate 42.7% 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. National Beverage Corp
Performance |
| Timeline |
| Alaska Air Group |
| National Beverage Corp |
Alaska Air and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and National Beverage
The main advantage of trading using opposite Alaska Air and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage'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 |
| National Beverage vs. Celsius Holdings | National Beverage vs. Monster Beverage Corp | National Beverage vs. Coca Cola Femsa SAB | National Beverage vs. Keurig Dr Pepper |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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