Correlation Between Alaska Air and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Planet Fitness 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 Planet Fitness 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 Planet Fitness, you can compare the effects of market volatilities on Alaska Air and Planet Fitness 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 Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Planet Fitness.
Diversification Opportunities for Alaska Air and Planet Fitness
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alaska and Planet is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness 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 Planet Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Fitness has no effect on the direction of Alaska Air i.e., Alaska Air and Planet Fitness go up and down completely randomly.
Pair Corralation between Alaska Air and Planet Fitness
Considering the 90-day investment horizon Alaska Air Group is expected to generate 1.24 times more return on investment than Planet Fitness. However, Alaska Air is 1.24 times more volatile than Planet Fitness. It trades about 0.28 of its potential returns per unit of risk. Planet Fitness is currently generating about 0.16 per unit of risk. If you would invest 3,995 in Alaska Air Group on September 12, 2024 and sell it today you would earn a total of 2,134 from holding Alaska Air Group or generate 53.42% 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. Planet Fitness
Performance |
| Timeline |
| Alaska Air Group |
| Planet Fitness |
Alaska Air and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and Planet Fitness
The main advantage of trading using opposite Alaska Air and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Planet Fitness 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 Planet Fitness will offset losses from the drop in Planet Fitness' 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 |
| Planet Fitness vs. Life Time Group | Planet Fitness vs. Bowlero Corp | Planet Fitness vs. JAKKS Pacific | Planet Fitness vs. Six Flags Entertainment |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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