Correlation Between Allegiant Travel and Azul SA
Can any of the company-specific risk be diversified away by investing in both Allegiant Travel and Azul SA 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 Azul SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegiant Travel and Azul SA, you can compare the effects of market volatilities on Allegiant Travel and Azul SA 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 Azul SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegiant Travel and Azul SA.
Diversification Opportunities for Allegiant Travel and Azul SA
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Allegiant and Azul is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Allegiant Travel and Azul SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azul SA 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 Azul SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azul SA has no effect on the direction of Allegiant Travel i.e., Allegiant Travel and Azul SA go up and down completely randomly.
Pair Corralation between Allegiant Travel and Azul SA
Given the investment horizon of 90 days Allegiant Travel is expected to generate 0.82 times more return on investment than Azul SA. However, Allegiant Travel is 1.21 times less risky than Azul SA. It trades about 0.23 of its potential returns per unit of risk. Azul SA is currently generating about -0.15 per unit of risk. If you would invest 6,287 in Allegiant Travel on August 23, 2024 and sell it today you would earn a total of 1,230 from holding Allegiant Travel or generate 19.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allegiant Travel vs. Azul SA
Performance |
| Timeline |
| Allegiant Travel |
| Azul SA |
Allegiant Travel and Azul SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegiant Travel and Azul SA
The main advantage of trading using opposite Allegiant Travel and Azul SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegiant Travel position performs unexpectedly, Azul SA 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 Azul SA will offset losses from the drop in Azul SA'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 |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |