Correlation Between Fevertree Drinks and Alaska Air
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks 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 Fevertree Drinks and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks PLC and Alaska Air Group, you can compare the effects of market volatilities on Fevertree Drinks 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 Fevertree Drinks with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Alaska Air.
Diversification Opportunities for Fevertree Drinks and Alaska Air
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fevertree and Alaska is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks PLC 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 Fevertree Drinks 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 Fevertree Drinks PLC 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 Fevertree Drinks i.e., Fevertree Drinks and Alaska Air go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Alaska Air
Assuming the 90 days trading horizon Fevertree Drinks PLC is expected to under-perform the Alaska Air. But the stock apears to be less risky and, when comparing its historical volatility, Fevertree Drinks PLC is 1.12 times less risky than Alaska Air. The stock trades about -0.06 of its potential returns per unit of risk. The Alaska Air Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,588 in Alaska Air Group on September 20, 2024 and sell it today you would earn a total of 2,426 from holding Alaska Air Group or generate 67.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fevertree Drinks PLC vs. Alaska Air Group
Performance |
| Timeline |
| Fevertree Drinks PLC |
| Alaska Air Group |
Fevertree Drinks and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Alaska Air
The main advantage of trading using opposite Fevertree Drinks and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks 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.| Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc |
| Alaska Air vs. BOSTON BEER A | Alaska Air vs. China Resources Beer | Alaska Air vs. Fevertree Drinks PLC | Alaska Air vs. The Boston Beer |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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