Correlation Between Alaska Air and International Paper
Can any of the company-specific risk be diversified away by investing in both Alaska Air and International Paper 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 International Paper 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 International Paper, you can compare the effects of market volatilities on Alaska Air and International Paper 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 International Paper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and International Paper.
Diversification Opportunities for Alaska Air and International Paper
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alaska and International is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and International Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Paper 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 International Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Paper has no effect on the direction of Alaska Air i.e., Alaska Air and International Paper go up and down completely randomly.
Pair Corralation between Alaska Air and International Paper
If you would invest 3,590 in Alaska Air Group on September 3, 2024 and sell it today you would earn a total of 1,670 from holding Alaska Air Group or generate 46.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 1.56% |
| Values | Daily Returns |
Alaska Air Group vs. International Paper
Performance |
| Timeline |
| Alaska Air Group |
| International Paper |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Alaska Air and International Paper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and International Paper
The main advantage of trading using opposite Alaska Air and International Paper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, International Paper 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 International Paper will offset losses from the drop in International Paper's long position.| Alaska Air vs. JetBlue Airways Corp | Alaska Air vs. Allegiant Travel | Alaska Air vs. Copa Holdings SA | Alaska Air vs. SkyWest |
| International Paper vs. Vera Bradley | International Paper vs. SkyWest | International Paper vs. Alaska Air Group | International Paper vs. Burlington Stores |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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