Correlation Between Alaska Air and Resource America

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

Diversification Opportunities for Alaska Air and Resource America

0.0

Correlation Coefficient

Alaska Air  Resource America

Pay attention - limited upside

The 3 months correlation between Alaska and Resource is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Resource America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resource America 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 Resource America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resource America has no effect on the direction of Alaska Air i.e., Alaska Air and Resource America go up and down completely randomly.

Pair Corralation between Alaska Air and Resource America

If you would invest  4,206  in Alaska Air Group on February 2, 2024 and sell it today you would earn a total of  64.00  from holding Alaska Air Group or generate 1.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Alaska Air Group  vs.  Resource America

Alaska Air Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 10 (%) 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.

Resource America

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Resource America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Resource America is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Alaska Air and Resource America

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

The idea behind Alaska Air Group and Resource America 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.