Correlation Between Alfi and Alaska Air

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

Diversification Opportunities for Alfi and Alaska Air

-0.34
  Correlation Coefficient

Very good diversification

The 3 months correlation between Alfi and Alaska is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Alfi Inc 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 Alfi 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 Alfi Inc 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 Alfi i.e., Alfi and Alaska Air go up and down completely randomly.

Pair Corralation between Alfi and Alaska Air

Considering the 90-day investment horizon Alfi Inc is expected to under-perform the Alaska Air. In addition to that, Alfi is 7.87 times more volatile than Alaska Air Group. It trades about -0.17 of its total potential returns per unit of risk. Alaska Air Group is currently generating about 0.11 per unit of volatility. If you would invest  4,486  in Alaska Air Group on September 5, 2022 and sell it today you would earn a total of  184.00  from holding Alaska Air Group or generate 4.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Alfi Inc  vs.  Alaska Air Group

 Performance (%) 
       Timeline  
Alfi Inc 
Alfi Performance
0 of 100
Over the last 90 days Alfi Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in January 2023. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Alfi Price Channel

Alaska Air Group 
Alaska Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady essential indicators, Alaska Air may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Alaska Price Channel

Alfi and Alaska Air Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alfi and Alaska Air

The main advantage of trading using opposite Alfi and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfi 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.
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The idea behind Alfi Inc 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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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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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