Correlation Between Alaska Air and SolarBank

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

Diversification Opportunities for Alaska Air and SolarBank

0.0

Correlation Coefficient

Alaska Air  SolarBank

Pay attention - limited upside

The 3 months correlation between Alaska and SolarBank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and SolarBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarBank 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 SolarBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarBank has no effect on the direction of Alaska Air i.e., Alaska Air and SolarBank go up and down completely randomly.

Pair Corralation between Alaska Air and SolarBank

If you would invest  5,255  in Alaska Air Group on December 3, 2024 and sell it today you would earn a total of  1,973  from holding Alaska Air Group or generate 37.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Alaska Air Group  vs.  SolarBank

Alaska Air Group

Risk-Adjusted Performance

Good

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 quite conflicting essential indicators, Alaska Air disclosed solid returns over the last few months and may actually be approaching a breakup point.

SolarBank

Risk-Adjusted Performance

Very Weak

Over the last 90 days SolarBank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, SolarBank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Alaska Air and SolarBank

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

The idea behind Alaska Air Group and SolarBank 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.