Correlation Between Alaska Air and Marten Transport

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

Diversification Opportunities for Alaska Air and Marten Transport

0.26

Correlation Coefficient

Alaska Air  Marten Transport

Modest diversification

The 3 months correlation between Alaska and Marten is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Marten Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marten Transport 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 Marten Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marten Transport has no effect on the direction of Alaska Air i.e., Alaska Air and Marten Transport go up and down completely randomly.

Pair Corralation between Alaska Air and Marten Transport

Considering the 90-day investment horizon Alaska Air Group is expected to generate 1.44 times more return on investment than Marten Transport. However, Alaska Air is 1.44 times more volatile than Marten Transport. It trades about 0.04 of its potential returns per unit of risk. Marten Transport is currently generating about -0.04 per unit of risk. If you would invest  5,016  in Alaska Air Group on May 7, 2025 and sell it today you would earn a total of  196.50  from holding Alaska Air Group or generate 3.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Alaska Air Group  vs.  Marten Transport

Alaska Air Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Alaska Air is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Marten Transport

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marten Transport has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Marten Transport is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Alaska Air and Marten Transport

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

The idea behind Alaska Air Group and Marten Transport 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.