Correlation Between Alaska Air and PHINIA
Can any of the company-specific risk be diversified away by investing in both Alaska Air and PHINIA 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 PHINIA 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 PHINIA Inc, you can compare the effects of market volatilities on Alaska Air and PHINIA 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 PHINIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and PHINIA.
Diversification Opportunities for Alaska Air and PHINIA
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alaska and PHINIA is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and PHINIA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHINIA Inc 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 PHINIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHINIA Inc has no effect on the direction of Alaska Air i.e., Alaska Air and PHINIA go up and down completely randomly.
Pair Corralation between Alaska Air and PHINIA
Considering the 90-day investment horizon Alaska Air Group is expected to generate 2.21 times more return on investment than PHINIA. However, Alaska Air is 2.21 times more volatile than PHINIA Inc. It trades about 0.26 of its potential returns per unit of risk. PHINIA Inc is currently generating about 0.07 per unit of risk. If you would invest 5,185 in Alaska Air Group on September 12, 2024 and sell it today you would earn a total of 944.00 from holding Alaska Air Group or generate 18.21% 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. PHINIA Inc
Performance |
| Timeline |
| Alaska Air Group |
| PHINIA Inc |
Alaska Air and PHINIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and PHINIA
The main advantage of trading using opposite Alaska Air and PHINIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, PHINIA 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 PHINIA will offset losses from the drop in PHINIA'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 |
| PHINIA vs. Acco Brands | PHINIA vs. Triton International Limited | PHINIA vs. Coursera | PHINIA vs. United Rentals |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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