Correlation Between Hospital Mater and Alaska Air

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

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

Diversification Opportunities for Hospital Mater and Alaska Air

0.03

Correlation Coefficient

Hospital Mater  Alaska Air

Significant diversification

The 3 months correlation between Hospital and Alaska is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hospital Mater Dei 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 Hospital Mater 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 Hospital Mater Dei 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 Hospital Mater i.e., Hospital Mater and Alaska Air go up and down completely randomly.

Pair Corralation between Hospital Mater and Alaska Air

Assuming the 90 days trading horizon Hospital Mater Dei is expected to generate 1.31 times more return on investment than Alaska Air. However, Hospital Mater is 1.31 times more volatile than Alaska Air Group,. It trades about 0.01 of its potential returns per unit of risk. Alaska Air Group, is currently generating about -0.18 per unit of risk. If you would invest  367.00  in Hospital Mater Dei on December 24, 2024 and sell it today you would lose (5.00) from holding Hospital Mater Dei or give up 1.36% of portfolio value over 90 days.

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

Hospital Mater Dei  vs.  Alaska Air Group,

Hospital Mater Dei

Risk-Adjusted Performance

Weak

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

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 weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hospital Mater and Alaska Air

The main advantage of trading using opposite Hospital Mater and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hospital Mater 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 Hospital Mater Dei 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.