Correlation Between Alaska Air and Marfrig Global
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Marfrig Global 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 Marfrig Global 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 Marfrig Global Foods, you can compare the effects of market volatilities on Alaska Air and Marfrig Global 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 Marfrig Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Marfrig Global.
Diversification Opportunities for Alaska Air and Marfrig Global
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alaska and Marfrig is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Marfrig Global Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marfrig Global Foods 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 Marfrig Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marfrig Global Foods has no effect on the direction of Alaska Air i.e., Alaska Air and Marfrig Global go up and down completely randomly.
Pair Corralation between Alaska Air and Marfrig Global
Considering the 90-day investment horizon Alaska Air is expected to generate 2.26 times less return on investment than Marfrig Global. But when comparing it to its historical volatility, Alaska Air Group is 1.58 times less risky than Marfrig Global. It trades about 0.16 of its potential returns per unit of risk. Marfrig Global Foods is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 263.00 in Marfrig Global Foods on September 2, 2024 and sell it today you would earn a total of 42.00 from holding Marfrig Global Foods or generate 15.97% 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. Marfrig Global Foods
Performance |
| Timeline |
| Alaska Air Group |
| Marfrig Global Foods |
Alaska Air and Marfrig Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and Marfrig Global
The main advantage of trading using opposite Alaska Air and Marfrig Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Marfrig Global 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 Marfrig Global will offset losses from the drop in Marfrig Global's long position.| Alaska Air vs. Canadian Pacific Railway | Alaska Air vs. Werner Enterprises | Alaska Air vs. Canadian National Railway | Alaska Air vs. CSX Corporation |
| Marfrig Global vs. The A2 Milk | Marfrig Global vs. Artisan Consumer Goods | Marfrig Global vs. General Mills |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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