Correlation Between United Natural and Alaska Air
Can any of the company-specific risk be diversified away by investing in both United Natural 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 United Natural and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Natural Foods and Alaska Air Group, you can compare the effects of market volatilities on United Natural 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 United Natural with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Alaska Air.
Diversification Opportunities for United Natural and Alaska Air
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between United and Alaska is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods 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 United Natural 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 United Natural Foods 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 United Natural i.e., United Natural and Alaska Air go up and down completely randomly.
Pair Corralation between United Natural and Alaska Air
Assuming the 90 days horizon United Natural Foods is expected to generate 1.56 times more return on investment than Alaska Air. However, United Natural is 1.56 times more volatile than Alaska Air Group. It trades about 0.29 of its potential returns per unit of risk. Alaska Air Group is currently generating about 0.34 per unit of risk. If you would invest 2,715 in United Natural Foods on November 20, 2024 and sell it today you would earn a total of 462.00 from holding United Natural Foods or generate 17.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 95.45% |
Values | Daily Returns |
United Natural Foods vs. Alaska Air Group
Performance |
Timeline |
United Natural Foods |
Alaska Air Group |
United Natural and Alaska Air Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Natural and Alaska Air
The main advantage of trading using opposite United Natural and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural 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.United Natural vs. Eurasia Mining Plc | ||
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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