Correlation Between Spirit Airlines and Alaska Air
Can any of the company-specific risk be diversified away by investing in both Spirit Airlines 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 Spirit Airlines and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirit Airlines and Alaska Air Group, you can compare the effects of market volatilities on Spirit Airlines 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 Spirit Airlines with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirit Airlines and Alaska Air.
Diversification Opportunities for Spirit Airlines and Alaska Air
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Spirit and Alaska is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Spirit Airlines 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 Spirit Airlines 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 Spirit Airlines 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 Spirit Airlines i.e., Spirit Airlines and Alaska Air go up and down completely randomly.
Pair Corralation between Spirit Airlines and Alaska Air
Given the investment horizon of 90 days Spirit Airlines is expected to under-perform the Alaska Air. In addition to that, Spirit Airlines is 12.04 times more volatile than Alaska Air Group. It trades about -0.32 of its total potential returns per unit of risk. Alaska Air Group is currently generating about 0.26 per unit of volatility. If you would invest 4,710 in Alaska Air Group on August 29, 2024 and sell it today you would earn a total of 583.00 from holding Alaska Air Group or generate 12.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.82% |
| Values | Daily Returns |
Spirit Airlines vs. Alaska Air Group
Performance |
| Timeline |
| Spirit Airlines |
| Alaska Air Group |
Spirit Airlines and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirit Airlines and Alaska Air
The main advantage of trading using opposite Spirit Airlines and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirit Airlines 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.| Spirit Airlines vs. American Airlines Group | Spirit Airlines vs. Delta Air Lines | Spirit Airlines vs. Southwest Airlines | Spirit Airlines 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |