Correlation Between Fevertree Drinks and Allegiant Travel
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks and Allegiant Travel 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 Fevertree Drinks and Allegiant Travel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks Plc and Allegiant Travel, you can compare the effects of market volatilities on Fevertree Drinks and Allegiant Travel 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 Fevertree Drinks with a short position of Allegiant Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Allegiant Travel.
Diversification Opportunities for Fevertree Drinks and Allegiant Travel
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fevertree and Allegiant is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Allegiant Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegiant Travel and Fevertree Drinks 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 Fevertree Drinks Plc are associated (or correlated) with Allegiant Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegiant Travel has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Allegiant Travel go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Allegiant Travel
Assuming the 90 days horizon Fevertree Drinks Plc is expected to under-perform the Allegiant Travel. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fevertree Drinks Plc is 3.6 times less risky than Allegiant Travel. The pink sheet trades about -0.34 of its potential returns per unit of risk. The Allegiant Travel is currently generating about 0.34 of returns per unit of risk over similar time horizon. 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 Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fevertree Drinks Plc vs. Allegiant Travel
Performance |
| Timeline |
| Fevertree Drinks Plc |
| Allegiant Travel |
Fevertree Drinks and Allegiant Travel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Allegiant Travel
The main advantage of trading using opposite Fevertree Drinks and Allegiant Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks position performs unexpectedly, Allegiant Travel 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 Allegiant Travel will offset losses from the drop in Allegiant Travel's long position.| Fevertree Drinks vs. PepsiCo | Fevertree Drinks vs. Coca Cola Consolidated | Fevertree Drinks vs. Monster Beverage Corp | Fevertree Drinks vs. Celsius Holdings |
| Allegiant Travel vs. Azul SA | Allegiant Travel vs. Alaska Air Group | Allegiant Travel vs. International Consolidated Airlines | Allegiant Travel vs. Sun Country Airlines |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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