Correlation Between Allegiant Travel and Sumitomo Electric
Can any of the company-specific risk be diversified away by investing in both Allegiant Travel and Sumitomo Electric 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 Sumitomo Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegiant Travel and Sumitomo Electric Industries, you can compare the effects of market volatilities on Allegiant Travel and Sumitomo Electric 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 Sumitomo Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegiant Travel and Sumitomo Electric.
Diversification Opportunities for Allegiant Travel and Sumitomo Electric
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Allegiant and Sumitomo is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Allegiant Travel and Sumitomo Electric Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Electric 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 Sumitomo Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Electric has no effect on the direction of Allegiant Travel i.e., Allegiant Travel and Sumitomo Electric go up and down completely randomly.
Pair Corralation between Allegiant Travel and Sumitomo Electric
If you would invest 7,483 in Allegiant Travel on September 12, 2024 and sell it today you would earn a total of 1,187 from holding Allegiant Travel or generate 15.86% 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. Sumitomo Electric Industries
Performance |
| Timeline |
| Allegiant Travel |
| Sumitomo Electric |
Allegiant Travel and Sumitomo Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegiant Travel and Sumitomo Electric
The main advantage of trading using opposite Allegiant Travel and Sumitomo Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegiant Travel position performs unexpectedly, Sumitomo Electric 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 Sumitomo Electric will offset losses from the drop in Sumitomo Electric's long position.| Allegiant Travel vs. Volaris | Allegiant Travel vs. flyExclusive, | Allegiant Travel vs. Alaska Air Group | Allegiant Travel vs. Copa Holdings SA |
| Sumitomo Electric vs. Air Transport Services | Sumitomo Electric vs. Delta Air Lines | Sumitomo Electric vs. Allegiant Travel | Sumitomo Electric vs. Kite Realty 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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