Correlation Between Alaska Air and Worthington Steel

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

Diversification Opportunities for Alaska Air and Worthington Steel

0.04

Correlation Coefficient

Alaska Air  Worthington Steel

Significant diversification

The 3 months correlation between Alaska and Worthington is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Worthington Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Steel 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 Worthington Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worthington Steel has no effect on the direction of Alaska Air i.e., Alaska Air and Worthington Steel go up and down completely randomly.

Pair Corralation between Alaska Air and Worthington Steel

Considering the 90-day investment horizon Alaska Air Group is expected to generate 0.86 times more return on investment than Worthington Steel. However, Alaska Air Group is 1.16 times less risky than Worthington Steel. It trades about 0.21 of its potential returns per unit of risk. Worthington Steel is currently generating about -0.43 per unit of risk. If you would invest  5,588  in Alaska Air Group on October 6, 2024 and sell it today you would earn a total of  810.00  from holding Alaska Air Group or generate 14.5% return on investment over 90 days.

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

Alaska Air Group  vs.  Worthington Steel

Alaska Air Group

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 21 (%) 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.

Worthington Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worthington Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Worthington Steel is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alaska Air and Worthington Steel

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

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