Correlation Between Alaska Air and Air Products

Can any of the company-specific risk be diversified away by investing in both Alaska Air and Air Products 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 Alaska Air and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alaska Air Group, and Air Products and, you can compare the effects of market volatilities on Alaska Air and Air Products 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 Alaska Air with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Air Products.

Diversification Opportunities for Alaska Air and Air Products

0.25

Correlation Coefficient

Alaska Air  Air Products

Modest diversification

The 3 months correlation between Alaska and Air is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group, and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products and Alaska Air 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 Alaska Air Group, are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products has no effect on the direction of Alaska Air i.e., Alaska Air and Air Products go up and down completely randomly.

Pair Corralation between Alaska Air and Air Products

Assuming the 90 days trading horizon Alaska Air Group, is expected to under-perform the Air Products. In addition to that, Alaska Air is 5.55 times more volatile than Air Products and. It trades about -0.18 of its total potential returns per unit of risk. Air Products and is currently generating about 0.06 per unit of volatility. If you would invest  44,670  in Air Products and on December 24, 2024 and sell it today you would earn a total of  722.00  from holding Air Products and or generate 1.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Alaska Air Group,  vs.  Air Products and

Alaska Air Group,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alaska Air Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Air Products

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Air Products and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Air Products is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alaska Air and Air Products

The main advantage of trading using opposite Alaska Air and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.

The idea behind Alaska Air Group, and Air Products and pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.