Correlation Between Alaska Air and Waste Management
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on Alaska Air and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Waste Management.
Diversification Opportunities for Alaska Air and Waste Management
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alaska and Waste is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Alaska Air i.e., Alaska Air and Waste Management go up and down completely randomly.
Pair Corralation between Alaska Air and Waste Management
Considering the 90-day investment horizon Alaska Air Group is expected to under-perform the Waste Management. In addition to that, Alaska Air is 2.35 times more volatile than Waste Management. It trades about -0.31 of its total potential returns per unit of risk. Waste Management is currently generating about -0.02 per unit of volatility. If you would invest 22,693 in Waste Management on January 7, 2025 and sell it today you would lose (173.00) from holding Waste Management or give up 0.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. Waste Management
Performance |
| Timeline |
| Alaska Air Group |
| Waste Management |
Alaska Air and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and Waste Management
The main advantage of trading using opposite Alaska Air and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| Alaska Air vs. Southwest Airlines | Alaska Air vs. JetBlue Airways Corp | Alaska Air vs. United Airlines Holdings | Alaska Air vs. Frontier Group Holdings |
| Waste Management vs. Agilyx AS | Waste Management vs. BQE Water | Waste Management vs. EcoPlus | Waste Management vs. Anaergia |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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