Correlation Between Allegiant Travel and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Allegiant Travel and BJs Restaurants 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 BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegiant Travel and BJs Restaurants, you can compare the effects of market volatilities on Allegiant Travel and BJs Restaurants 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 BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegiant Travel and BJs Restaurants.
Diversification Opportunities for Allegiant Travel and BJs Restaurants
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Allegiant and BJs is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Allegiant Travel and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants 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 BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of Allegiant Travel i.e., Allegiant Travel and BJs Restaurants go up and down completely randomly.
Pair Corralation between Allegiant Travel and BJs Restaurants
Given the investment horizon of 90 days Allegiant Travel is expected to generate 1.17 times more return on investment than BJs Restaurants. However, Allegiant Travel is 1.17 times more volatile than BJs Restaurants. It trades about 0.47 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.06 per unit of risk. If you would invest 8,730 in Allegiant Travel on October 23, 2024 and sell it today you would earn a total of 1,569 from holding Allegiant Travel or generate 17.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Allegiant Travel vs. BJs Restaurants
Performance |
| Timeline |
| Allegiant Travel |
| BJs Restaurants |
Allegiant Travel and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegiant Travel and BJs Restaurants
The main advantage of trading using opposite Allegiant Travel and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegiant Travel position performs unexpectedly, BJs Restaurants 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 BJs Restaurants will offset losses from the drop in BJs Restaurants' 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 |
| BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. The Cheesecake Factory |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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