Correlation Between Alaska Air and Udemy

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

Diversification Opportunities for Alaska Air and Udemy

-0.02

Correlation Coefficient

Alaska Air  Udemy

Good diversification

The 3 months correlation between Alaska and Udemy is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Udemy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Udemy Inc 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 Udemy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Udemy Inc has no effect on the direction of Alaska Air i.e., Alaska Air and Udemy go up and down completely randomly.

Pair Corralation between Alaska Air and Udemy

Considering the 90-day investment horizon Alaska Air Group is expected to under-perform the Udemy. But the stock apears to be less risky and, when comparing its historical volatility, Alaska Air Group is 1.66 times less risky than Udemy. The stock trades about -0.11 of its potential returns per unit of risk. The Udemy Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  806.00  in Udemy Inc on December 27, 2024 and sell it today you would earn a total of  47.00  from holding Udemy Inc or generate 5.83% return on investment over 90 days.

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

Alaska Air Group  vs.  Udemy Inc

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 conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Udemy Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Udemy Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Udemy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Alaska Air and Udemy

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

The idea behind Alaska Air Group and Udemy Inc 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.