Correlation Between Analog Devices and Allegiant Travel
Can any of the company-specific risk be diversified away by investing in both Analog Devices and Allegiant Travel 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 Analog Devices and Allegiant Travel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Allegiant Travel, you can compare the effects of market volatilities on Analog Devices and Allegiant Travel 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 Analog Devices with a short position of Allegiant Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Allegiant Travel.
Diversification Opportunities for Analog Devices and Allegiant Travel
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Analog and Allegiant is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Allegiant Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegiant Travel and Analog Devices 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 Analog Devices are associated (or correlated) with Allegiant Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegiant Travel has no effect on the direction of Analog Devices i.e., Analog Devices and Allegiant Travel go up and down completely randomly.
Pair Corralation between Analog Devices and Allegiant Travel
Considering the 90-day investment horizon Analog Devices is expected to under-perform the Allegiant Travel. But the stock apears to be less risky and, when comparing its historical volatility, Analog Devices is 1.94 times less risky than Allegiant Travel. The stock trades about -0.12 of its potential returns per unit of risk. The Allegiant Travel is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 6,296 in Allegiant Travel on August 31, 2024 and sell it today you would earn a total of 1,806 from holding Allegiant Travel or generate 28.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. Allegiant Travel
Performance |
| Timeline |
| Analog Devices |
| Allegiant Travel |
Analog Devices and Allegiant Travel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Allegiant Travel
The main advantage of trading using opposite Analog Devices and Allegiant Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Allegiant Travel 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 Allegiant Travel will offset losses from the drop in Allegiant Travel's long position.| Analog Devices vs. MACOM Technology Solutions | Analog Devices vs. FormFactor | Analog Devices vs. MaxLinear | Analog Devices vs. nLIGHT Inc |
| Allegiant Travel vs. Azul SA | Allegiant Travel vs. Alaska Air Group | Allegiant Travel vs. International Consolidated Airlines | Allegiant Travel vs. Sun Country Airlines |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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