Correlation Between NYSE Composite and Alaska Air
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Alaska Air Group, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Alaska Air.
Diversification Opportunities for NYSE Composite and Alaska Air
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Alaska is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Alaska Air go up and down completely randomly.
Pair Corralation between NYSE Composite and Alaska Air
Assuming the 90 days trading horizon NYSE Composite is expected to generate 7.09 times less return on investment than Alaska Air. But when comparing it to its historical volatility, NYSE Composite is 3.3 times less risky than Alaska Air. It trades about 0.13 of its potential returns per unit of risk. Alaska Air Group is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 4,583 in Alaska Air Group on August 24, 2024 and sell it today you would earn a total of 647.00 from holding Alaska Air Group or generate 14.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Alaska Air Group
Performance |
| Timeline |
NYSE Composite and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Alaska Air Group
Pair trading matchups for Alaska Air
Pair Trading with NYSE Composite and Alaska Air
The main advantage of trading using opposite NYSE Composite and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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