Correlation Between Alaska Air and X FAB

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

Diversification Opportunities for Alaska Air and X FAB

0.4

Correlation Coefficient

Alaska Air  X FAB

Very weak diversification

The 3 months correlation between Alaska and 0ROZ is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Alaska Air i.e., Alaska Air and X FAB go up and down completely randomly.

Pair Corralation between Alaska Air and X FAB

Assuming the 90 days trading horizon Alaska Air is expected to generate 1.54 times less return on investment than X FAB. In addition to that, Alaska Air is 1.13 times more volatile than X FAB Silicon Foundries. It trades about 0.15 of its total potential returns per unit of risk. X FAB Silicon Foundries is currently generating about 0.26 per unit of volatility. If you would invest  464.00  in X FAB Silicon Foundries on April 24, 2025 and sell it today you would earn a total of  196.00  from holding X FAB Silicon Foundries or generate 42.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Alaska Air Group  vs.  X FAB Silicon Foundries

Alaska Air Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alaska Air unveiled solid returns over the last few months and may actually be approaching a breakup point.

X FAB Silicon

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in X FAB Silicon Foundries are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, X FAB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alaska Air and X FAB

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

The idea behind Alaska Air Group and X FAB Silicon Foundries 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.