Correlation Between PSQ Holdings and Alaska Air

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

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

Diversification Opportunities for PSQ Holdings and Alaska Air

0.57

Correlation Coefficient

PSQ Holdings  Alaska Air

Very weak diversification

The 3 months correlation between PSQ and Alaska is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding PSQ Holdings 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 PSQ Holdings 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 PSQ Holdings 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 PSQ Holdings i.e., PSQ Holdings and Alaska Air go up and down completely randomly.

Pair Corralation between PSQ Holdings and Alaska Air

Given the investment horizon of 90 days PSQ Holdings is expected to generate 17.94 times more return on investment than Alaska Air. However, PSQ Holdings is 17.94 times more volatile than Alaska Air Group. It trades about 0.17 of its potential returns per unit of risk. Alaska Air Group is currently generating about 0.35 per unit of risk. If you would invest  210.00  in PSQ Holdings on September 25, 2024 and sell it today you would earn a total of  179.00  from holding PSQ Holdings or generate 85.24% return on investment over 90 days.

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

PSQ Holdings  vs.  Alaska Air Group

PSQ Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PSQ Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, PSQ Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Alaska Air Group

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal essential indicators, Alaska Air disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PSQ Holdings and Alaska Air

The main advantage of trading using opposite PSQ Holdings and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PSQ Holdings 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 PSQ Holdings 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.