Correlation Between Western Sierra and Alaska Air
Can any of the company-specific risk be diversified away by investing in both Western Sierra 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 Western Sierra and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Sierra Mining and Alaska Air Group, you can compare the effects of market volatilities on Western Sierra 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 Western Sierra with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Sierra and Alaska Air.
Diversification Opportunities for Western Sierra and Alaska Air
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Western and Alaska is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Western Sierra Mining 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 Western Sierra 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 Western Sierra Mining 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 Western Sierra i.e., Western Sierra and Alaska Air go up and down completely randomly.
Pair Corralation between Western Sierra and Alaska Air
Given the investment horizon of 90 days Western Sierra Mining is expected to generate 48.59 times more return on investment than Alaska Air. However, Western Sierra is 48.59 times more volatile than Alaska Air Group. It trades about 0.1 of its potential returns per unit of risk. Alaska Air Group is currently generating about 0.02 per unit of risk. If you would invest 8.45 in Western Sierra Mining on September 2, 2024 and sell it today you would lose (7.77) from holding Western Sierra Mining or give up 91.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Western Sierra Mining vs. Alaska Air Group
Performance |
| Timeline |
| Western Sierra Mining |
| Alaska Air Group |
Western Sierra and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Sierra and Alaska Air
The main advantage of trading using opposite Western Sierra and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Sierra 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.| Western Sierra vs. Holloman Energy Corp | Western Sierra vs. cbdMD Inc | Western Sierra vs. Evolus Inc | Western Sierra vs. CV Sciences |
| Alaska Air vs. Canadian Pacific Railway | Alaska Air vs. Werner Enterprises | Alaska Air vs. Canadian National Railway | Alaska Air vs. CSX Corporation |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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