Correlation Between Alaska Air and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Westinghouse 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 Alaska Air and Westinghouse Air 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 Westinghouse Air Brake, you can compare the effects of market volatilities on Alaska Air and Westinghouse 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 Alaska Air with a short position of Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Westinghouse Air.
Diversification Opportunities for Alaska Air and Westinghouse Air
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alaska and Westinghouse is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Westinghouse Air Brake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westinghouse Air Brake 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 Westinghouse Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westinghouse Air Brake has no effect on the direction of Alaska Air i.e., Alaska Air and Westinghouse Air go up and down completely randomly.
Pair Corralation between Alaska Air and Westinghouse Air
Considering the 90-day investment horizon Alaska Air Group is expected to generate 2.58 times more return on investment than Westinghouse Air. However, Alaska Air is 2.58 times more volatile than Westinghouse Air Brake. It trades about 0.3 of its potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.31 per unit of risk. If you would invest 3,995 in Alaska Air Group on September 12, 2024 and sell it today you would earn a total of 2,414 from holding Alaska Air Group or generate 60.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Alaska Air Group vs. Westinghouse Air Brake
Performance |
Timeline |
Alaska Air Group |
Westinghouse Air Brake |
Alaska Air and Westinghouse Air Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alaska Air and Westinghouse Air
The main advantage of trading using opposite Alaska Air and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Westinghouse 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 Westinghouse Air will offset losses from the drop in Westinghouse Air's long position.Alaska Air vs. Delta Air Lines | Alaska Air vs. United Airlines Holdings | Alaska Air vs. American Airlines Group | Alaska Air vs. JetBlue Airways Corp |
Westinghouse Air vs. Greenbrier Companies | Westinghouse Air vs. LB Foster | Westinghouse Air vs. Freightcar America | Westinghouse 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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