Correlation Between Delta Air and Alaska Air
Can any of the company-specific risk be diversified away by investing in both Delta Air and Alaska Air 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 Delta Air and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delta Air Lines and Alaska Air Group, you can compare the effects of market volatilities on Delta Air and Alaska Air 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 Delta Air with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Alaska Air.
Diversification Opportunities for Delta Air and Alaska Air
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Delta and Alaska is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Alaska Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group and Delta 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 Delta Air Lines are associated (or correlated) with Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group has no effect on the direction of Delta Air i.e., Delta Air and Alaska Air go up and down completely randomly.
Pair Corralation between Delta Air and Alaska Air
Considering the 90-day investment horizon Delta Air Lines is expected to under-perform the Alaska Air. But the stock apears to be less risky and, when comparing its historical volatility, Delta Air Lines is 1.03 times less risky than Alaska Air. The stock trades about -0.01 of its potential returns per unit of risk. The Alaska Air Group is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 6,634 in Alaska Air Group on November 18, 2024 and sell it today you would earn a total of 940.00 from holding Alaska Air Group or generate 14.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. Alaska Air Group
Performance |
| Timeline |
| Delta Air Lines |
| Alaska Air Group |
Delta Air and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Alaska Air
The main advantage of trading using opposite Delta Air and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Alaska Air 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 Alaska Air will offset losses from the drop in Alaska Air's long position.| Delta Air vs. American Airlines Group | Delta Air vs. Southwest Airlines | Delta Air vs. JetBlue Airways Corp | Delta Air vs. United Airlines Holdings |
| Alaska Air vs. Delta Air Lines | Alaska Air vs. United Airlines Holdings | Alaska Air vs. American Airlines Group | Alaska Air vs. JetBlue Airways Corp |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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