Correlation Between Semtech and Alaska Air
Can any of the company-specific risk be diversified away by investing in both Semtech 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 Semtech and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semtech and Alaska Air Group, you can compare the effects of market volatilities on Semtech 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 Semtech with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semtech and Alaska Air.
Diversification Opportunities for Semtech and Alaska Air
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Semtech and Alaska is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Semtech 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 Semtech 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 Semtech 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 Semtech i.e., Semtech and Alaska Air go up and down completely randomly.
Pair Corralation between Semtech and Alaska Air
Given the investment horizon of 90 days Semtech is expected to generate 2.0 times more return on investment than Alaska Air. However, Semtech is 2.0 times more volatile than Alaska Air Group. It trades about 0.16 of its potential returns per unit of risk. Alaska Air Group is currently generating about 0.1 per unit of risk. If you would invest 1,977 in Semtech on August 29, 2024 and sell it today you would earn a total of 4,334 from holding Semtech or generate 219.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Semtech vs. Alaska Air Group
Performance |
| Timeline |
| Semtech |
| Alaska Air Group |
Semtech and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Semtech and Alaska Air
The main advantage of trading using opposite Semtech and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semtech 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.| Semtech vs. Power Integrations | Semtech vs. Diodes Incorporated | Semtech vs. MACOM Technology Solutions | Semtech vs. Cirrus Logic |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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