Correlation Between Allegiant Travel and Delta Air
Can any of the company-specific risk be diversified away by investing in both Allegiant Travel and Delta Air 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 Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegiant Travel and Delta Air Lines, you can compare the effects of market volatilities on Allegiant Travel and Delta Air 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 Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegiant Travel and Delta Air.
Diversification Opportunities for Allegiant Travel and Delta Air
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Allegiant and Delta is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Allegiant Travel and Delta Air Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Air Lines 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 Delta Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Air Lines has no effect on the direction of Allegiant Travel i.e., Allegiant Travel and Delta Air go up and down completely randomly.
Pair Corralation between Allegiant Travel and Delta Air
Given the investment horizon of 90 days Allegiant Travel is expected to generate 1.52 times less return on investment than Delta Air. But when comparing it to its historical volatility, Allegiant Travel is 1.3 times less risky than Delta Air. It trades about 0.24 of its potential returns per unit of risk. Delta Air Lines is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 5,900 in Delta Air Lines on November 4, 2024 and sell it today you would earn a total of 827.00 from holding Delta Air Lines or generate 14.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allegiant Travel vs. Delta Air Lines
Performance |
| Timeline |
| Allegiant Travel |
| Delta Air Lines |
Allegiant Travel and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegiant Travel and Delta Air
The main advantage of trading using opposite Allegiant Travel and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegiant Travel position performs unexpectedly, Delta Air 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 Delta Air will offset losses from the drop in Delta Air'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 |
| Delta Air vs. American Airlines Group | Delta Air vs. Southwest Airlines | Delta Air vs. JetBlue Airways Corp | Delta Air vs. United Airlines Holdings |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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