Correlation Between Alaska Air and Intel

Can any of the company-specific risk be diversified away by investing in both Alaska Air and Intel 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 Intel 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 Intel, you can compare the effects of market volatilities on Alaska Air and Intel 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 Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Intel.

Diversification Opportunities for Alaska Air and Intel

-0.75

Correlation Coefficient

Alaska Air  Intel

Pay attention - limited upside

The 3 months correlation between Alaska and Intel is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group, and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Alaska Air i.e., Alaska Air and Intel go up and down completely randomly.

Pair Corralation between Alaska Air and Intel

Assuming the 90 days trading horizon Alaska Air Group, is expected to generate 1.3 times more return on investment than Intel. However, Alaska Air is 1.3 times more volatile than Intel. It trades about 0.21 of its potential returns per unit of risk. Intel is currently generating about 0.01 per unit of risk. If you would invest  25,000  in Alaska Air Group, on October 21, 2024 and sell it today you would earn a total of  15,610  from holding Alaska Air Group, or generate 62.44% return on investment over 90 days.

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

Alaska Air Group,  vs.  Intel

Alaska Air Group,

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group, are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Alaska Air sustained solid returns over the last few months and may actually be approaching a breakup point.

Intel

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Intel 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 Intel

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

The idea behind Alaska Air Group, and Intel 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.