Correlation Between PureTech Health and Alaska Air

Can any of the company-specific risk be diversified away by investing in both PureTech Health 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 PureTech Health and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PureTech Health plc and Alaska Air Group, you can compare the effects of market volatilities on PureTech Health 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 PureTech Health with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of PureTech Health and Alaska Air.

Diversification Opportunities for PureTech Health and Alaska Air

0.33

Correlation Coefficient

PureTech Health  Alaska Air

Weak diversification

The 3 months correlation between PureTech and Alaska is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health plc 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 PureTech Health 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 PureTech Health plc 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 PureTech Health i.e., PureTech Health and Alaska Air go up and down completely randomly.

Pair Corralation between PureTech Health and Alaska Air

Assuming the 90 days trading horizon PureTech Health is expected to generate 3.73 times less return on investment than Alaska Air. But when comparing it to its historical volatility, PureTech Health plc is 1.35 times less risky than Alaska Air. It trades about 0.04 of its potential returns per unit of risk. Alaska Air Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,476  in Alaska Air Group on April 21, 2025 and sell it today you would earn a total of  761.00  from holding Alaska Air Group or generate 17.0% return on investment over 90 days.

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

PureTech Health plc  vs.  Alaska Air Group

PureTech Health plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PureTech Health plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PureTech Health is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Alaska Air Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 7 (%) 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.

Pair Trading with PureTech Health and Alaska Air

The main advantage of trading using opposite PureTech Health and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PureTech Health 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 PureTech Health plc 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.