Correlation Between RCS MediaGroup and Alaska Air

Can any of the company-specific risk be diversified away by investing in both RCS MediaGroup and Alaska 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 RCS MediaGroup and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RCS MediaGroup SpA and Alaska Air Group, you can compare the effects of market volatilities on RCS MediaGroup and Alaska 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 RCS MediaGroup with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCS MediaGroup and Alaska Air.

Diversification Opportunities for RCS MediaGroup and Alaska Air

0.89

Correlation Coefficient

RCS MediaGroup  Alaska Air

Very poor diversification

The 3 months correlation between RCS and Alaska is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and Alaska Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group and RCS MediaGroup 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 RCS MediaGroup SpA are associated (or correlated) with Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group has no effect on the direction of RCS MediaGroup i.e., RCS MediaGroup and Alaska Air go up and down completely randomly.

Pair Corralation between RCS MediaGroup and Alaska Air

Assuming the 90 days trading horizon RCS MediaGroup SpA is expected to generate 0.76 times more return on investment than Alaska Air. However, RCS MediaGroup SpA is 1.32 times less risky than Alaska Air. It trades about 0.05 of its potential returns per unit of risk. Alaska Air Group is currently generating about 0.04 per unit of risk. If you would invest  64.00  in RCS MediaGroup SpA on October 4, 2024 and sell it today you would earn a total of  21.00  from holding RCS MediaGroup SpA or generate 32.81% return on investment over 90 days.

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

RCS MediaGroup SpA  vs.  Alaska Air Group

RCS MediaGroup SpA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RCS MediaGroup SpA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, RCS MediaGroup may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Alaska Air Group

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Alaska Air unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RCS MediaGroup and Alaska Air

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

The idea behind RCS MediaGroup SpA and Alaska Air Group 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.