Correlation Between Allegiant Travel and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Allegiant Travel and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegiant Travel and Dow Jones Industrial, you can compare the effects of market volatilities on Allegiant Travel and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegiant Travel and Dow Jones.
Diversification Opportunities for Allegiant Travel and Dow Jones
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Allegiant and Dow is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Allegiant Travel and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Allegiant Travel i.e., Allegiant Travel and Dow Jones go up and down completely randomly.
Pair Corralation between Allegiant Travel and Dow Jones
Given the investment horizon of 90 days Allegiant Travel is expected to generate 3.95 times more return on investment than Dow Jones. However, Allegiant Travel is 3.95 times more volatile than Dow Jones Industrial. It trades about 0.22 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of risk. If you would invest 6,347 in Allegiant Travel on August 24, 2024 and sell it today you would earn a total of 1,170 from holding Allegiant Travel or generate 18.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allegiant Travel vs. Dow Jones Industrial
Performance |
| Timeline |
Allegiant Travel and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Allegiant Travel
Pair trading matchups for Allegiant Travel
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Allegiant Travel and Dow Jones
The main advantage of trading using opposite Allegiant Travel and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegiant Travel position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' 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 |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |