Correlation Between American Airlines and Alaska Air

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both American Airlines 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 American Airlines and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Airlines Group and Alaska Air Group, you can compare the effects of market volatilities on American Airlines 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 American Airlines with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Alaska Air.

Diversification Opportunities for American Airlines and Alaska Air

0.19
  Correlation Coefficient

Average diversification

The 3 months correlation between American and Alaska is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group 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 American Airlines 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 American Airlines Group 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 American Airlines i.e., American Airlines and Alaska Air go up and down completely randomly.

Pair Corralation between American Airlines and Alaska Air

Considering the 90-day investment horizon American Airlines Group is expected to generate 1.07 times more return on investment than Alaska Air. However, American Airlines is 1.07 times more volatile than Alaska Air Group. It trades about 0.0 of its potential returns per unit of risk. Alaska Air Group is currently generating about -0.02 per unit of risk. If you would invest  1,612  in American Airlines Group on December 29, 2023 and sell it today you would lose (82.00) from holding American Airlines Group or give up 5.09% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

American Airlines Group  vs.  Alaska Air Group

 Performance 
       Timeline  
American Airlines 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in American Airlines Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, American Airlines disclosed solid returns over the last few months and may actually be approaching a breakup point.
Alaska Air Group 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
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.

American Airlines and Alaska Air Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Airlines and Alaska Air

The main advantage of trading using opposite American Airlines and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines 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 American Airlines Group 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

Other Complementary Tools

Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges