Correlation Between Allegiant Travel and Highway Holdings
Can any of the company-specific risk be diversified away by investing in both Allegiant Travel and Highway Holdings 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 Highway Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegiant Travel and Highway Holdings Limited, you can compare the effects of market volatilities on Allegiant Travel and Highway Holdings 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 Highway Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegiant Travel and Highway Holdings.
Diversification Opportunities for Allegiant Travel and Highway Holdings
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Allegiant and Highway is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Allegiant Travel and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings 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 Highway Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highway Holdings has no effect on the direction of Allegiant Travel i.e., Allegiant Travel and Highway Holdings go up and down completely randomly.
Pair Corralation between Allegiant Travel and Highway Holdings
Given the investment horizon of 90 days Allegiant Travel is expected to generate 3.33 times more return on investment than Highway Holdings. However, Allegiant Travel is 3.33 times more volatile than Highway Holdings Limited. It trades about 0.34 of its potential returns per unit of risk. Highway Holdings Limited is currently generating about 0.17 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allegiant Travel vs. Highway Holdings Limited
Performance |
| Timeline |
| Allegiant Travel |
| Highway Holdings |
Allegiant Travel and Highway Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegiant Travel and Highway Holdings
The main advantage of trading using opposite Allegiant Travel and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegiant Travel position performs unexpectedly, Highway Holdings 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 Highway Holdings will offset losses from the drop in Highway Holdings' 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 |
| Highway Holdings vs. Deswell Industries | Highway Holdings vs. Euro Tech Holdings | Highway Holdings vs. China Natural Resources | Highway Holdings vs. Arts Way Manufacturing Co |
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 CEOs Directory module to screen CEOs from public companies around the world.
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