Correlation Between Alaska Air and Chevron

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

Diversification Opportunities for Alaska Air and Chevron

0.17

Correlation Coefficient

Alaska Air  Chevron

Average diversification

The 3 months correlation between Alaska and Chevron is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Chevron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron 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 Chevron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron has no effect on the direction of Alaska Air i.e., Alaska Air and Chevron go up and down completely randomly.

Pair Corralation between Alaska Air and Chevron

Assuming the 90 days trading horizon Alaska Air Group is expected to generate 1.77 times more return on investment than Chevron. However, Alaska Air is 1.77 times more volatile than Chevron. It trades about 0.15 of its potential returns per unit of risk. Chevron is currently generating about 0.09 per unit of risk. If you would invest  3,677  in Alaska Air Group on April 25, 2025 and sell it today you would earn a total of  917.00  from holding Alaska Air Group or generate 24.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alaska Air Group  vs.  Chevron

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 fragile basic indicators, Alaska Air unveiled solid returns over the last few months and may actually be approaching a breakup point.

Chevron

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Chevron may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Alaska Air and Chevron

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

The idea behind Alaska Air Group and Chevron 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.