Correlation Between Alaska Air and Flex
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Flex 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 Flex 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 Flex, you can compare the effects of market volatilities on Alaska Air and Flex 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 Flex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Flex.
Diversification Opportunities for Alaska Air and Flex
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alaska and Flex is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flex 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 Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flex has no effect on the direction of Alaska Air i.e., Alaska Air and Flex go up and down completely randomly.
Pair Corralation between Alaska Air and Flex
Considering the 90-day investment horizon Alaska Air is expected to generate 1.25 times less return on investment than Flex. But when comparing it to its historical volatility, Alaska Air Group is 1.18 times less risky than Flex. It trades about 0.1 of its potential returns per unit of risk. Flex is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,504 in Flex on August 29, 2024 and sell it today you would earn a total of 1,488 from holding Flex or generate 59.42% 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. Flex
Performance |
| Timeline |
| Alaska Air Group |
| Flex |
Alaska Air and Flex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and Flex
The main advantage of trading using opposite Alaska Air and Flex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Flex 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 Flex will offset losses from the drop in Flex'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 |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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