Correlation Between Allegiant Travel and International Consolidated
Can any of the company-specific risk be diversified away by investing in both Allegiant Travel and International Consolidated 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 International Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegiant Travel and International Consolidated Airlines, you can compare the effects of market volatilities on Allegiant Travel and International Consolidated 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 International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegiant Travel and International Consolidated.
Diversification Opportunities for Allegiant Travel and International Consolidated
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Allegiant and International is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Allegiant Travel and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Allegiant Travel i.e., Allegiant Travel and International Consolidated go up and down completely randomly.
Pair Corralation between Allegiant Travel and International Consolidated
Given the investment horizon of 90 days Allegiant Travel is expected to generate 2.69 times less return on investment than International Consolidated. But when comparing it to its historical volatility, Allegiant Travel is 1.15 times less risky than International Consolidated. It trades about 0.02 of its potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 165.00 in International Consolidated Airlines on August 27, 2024 and sell it today you would earn a total of 120.00 from holding International Consolidated Airlines or generate 72.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Allegiant Travel vs. International Consolidated Air
Performance |
| Timeline |
| Allegiant Travel |
| International Consolidated |
Allegiant Travel and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegiant Travel and International Consolidated
The main advantage of trading using opposite Allegiant Travel and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegiant Travel position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated'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 |
| International Consolidated vs. Air China Limited | International Consolidated vs. China Southern 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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