Correlation Between Allegiant Travel and AKITA Drilling
Can any of the company-specific risk be diversified away by investing in both Allegiant Travel and AKITA Drilling 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 Allegiant Travel and AKITA Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegiant Travel and AKITA Drilling, you can compare the effects of market volatilities on Allegiant Travel and AKITA Drilling 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 Allegiant Travel with a short position of AKITA Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegiant Travel and AKITA Drilling.
Diversification Opportunities for Allegiant Travel and AKITA Drilling
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Allegiant and AKITA is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Allegiant Travel and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling and Allegiant Travel 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 Allegiant Travel are associated (or correlated) with AKITA Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKITA Drilling has no effect on the direction of Allegiant Travel i.e., Allegiant Travel and AKITA Drilling go up and down completely randomly.
Pair Corralation between Allegiant Travel and AKITA Drilling
Given the investment horizon of 90 days Allegiant Travel is expected to generate 2.56 times more return on investment than AKITA Drilling. However, Allegiant Travel is 2.56 times more volatile than AKITA Drilling. It trades about 0.34 of its potential returns per unit of risk. AKITA Drilling is currently generating about -0.07 per unit of risk. If you would invest 6,301 in Allegiant Travel on September 2, 2024 and sell it today you would earn a total of 1,883 from holding Allegiant Travel or generate 29.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Allegiant Travel vs. AKITA Drilling
Performance |
| Timeline |
| Allegiant Travel |
| AKITA Drilling |
Allegiant Travel and AKITA Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegiant Travel and AKITA Drilling
The main advantage of trading using opposite Allegiant Travel and AKITA Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegiant Travel position performs unexpectedly, AKITA Drilling 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 AKITA Drilling will offset losses from the drop in AKITA Drilling's long position.| Allegiant Travel vs. Azul SA | Allegiant Travel vs. Alaska Air Group | Allegiant Travel vs. International Consolidated Airlines | Allegiant Travel vs. Sun Country Airlines |
| AKITA Drilling vs. Cathedral Energy Services | AKITA Drilling vs. Vantage Drilling International | AKITA Drilling vs. Seadrill Limited | AKITA Drilling vs. Noble plc |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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