Correlation Between NESNVX and Alaska Air

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

By analyzing existing cross correlation between NESNVX 2625 14 SEP 51 and Alaska Air Group, you can compare the effects of market volatilities on NESNVX 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 NESNVX with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of NESNVX and Alaska Air.

Diversification Opportunities for NESNVX and Alaska Air

-0.1

Correlation Coefficient

NESNVX  Alaska Air

Good diversification

The 3 months correlation between NESNVX and Alaska is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding NESNVX 2625 14 SEP 51 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 NESNVX 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 NESNVX 2625 14 SEP 51 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 NESNVX i.e., NESNVX and Alaska Air go up and down completely randomly.

Pair Corralation between NESNVX and Alaska Air

Assuming the 90 days trading horizon NESNVX 2625 14 SEP 51 is expected to under-perform the Alaska Air. In addition to that, NESNVX is 1.2 times more volatile than Alaska Air Group. It trades about -0.01 of its total potential returns per unit of risk. Alaska Air Group is currently generating about 0.04 per unit of volatility. If you would invest  5,319  in Alaska Air Group on October 24, 2024 and sell it today you would earn a total of  1,477  from holding Alaska Air Group or generate 27.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	28.64%
Values	Daily Returns

NESNVX 2625 14 SEP 51  vs.  Alaska Air Group

NESNVX 2625 14

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NESNVX 2625 14 SEP 51 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NESNVX is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alaska Air Group

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 20 (%) 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.

Pair Trading with NESNVX and Alaska Air

The main advantage of trading using opposite NESNVX and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NESNVX 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 NESNVX 2625 14 SEP 51 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.