Correlation Between Allegiant Travel and National Beverage
Can any of the company-specific risk be diversified away by investing in both Allegiant Travel and National Beverage 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 National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegiant Travel and National Beverage Corp, you can compare the effects of market volatilities on Allegiant Travel and National Beverage 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 National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegiant Travel and National Beverage.
Diversification Opportunities for Allegiant Travel and National Beverage
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Allegiant and National is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Allegiant Travel and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp 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 National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Allegiant Travel i.e., Allegiant Travel and National Beverage go up and down completely randomly.
Pair Corralation between Allegiant Travel and National Beverage
Given the investment horizon of 90 days Allegiant Travel is expected to generate 2.45 times more return on investment than National Beverage. However, Allegiant Travel is 2.45 times more volatile than National Beverage Corp. It trades about 0.34 of its potential returns per unit of risk. National Beverage Corp is currently generating about 0.24 per unit of risk. If you would invest 6,301 in Allegiant Travel on September 2, 2024 and sell it today you would earn a total of 1,883 from holding Allegiant Travel or generate 29.88% 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. National Beverage Corp
Performance |
| Timeline |
| Allegiant Travel |
| National Beverage Corp |
Allegiant Travel and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegiant Travel and National Beverage
The main advantage of trading using opposite Allegiant Travel and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegiant Travel position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage'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 |
| National Beverage vs. Celsius Holdings | National Beverage vs. Monster Beverage Corp | National Beverage vs. Coca Cola Femsa SAB | National Beverage vs. Keurig Dr Pepper |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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