Correlation Between Global E and Allegiant Travel
Can any of the company-specific risk be diversified away by investing in both Global E 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 Global E and Allegiant Travel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global E Online and Allegiant Travel, you can compare the effects of market volatilities on Global E 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 Global E with a short position of Allegiant Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global E and Allegiant Travel.
Diversification Opportunities for Global E and Allegiant Travel
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and Allegiant is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and Allegiant Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegiant Travel and Global E 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 Global E Online 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 Global E i.e., Global E and Allegiant Travel go up and down completely randomly.
Pair Corralation between Global E and Allegiant Travel
Given the investment horizon of 90 days Global E Online is expected to generate 1.01 times more return on investment than Allegiant Travel. However, Global E is 1.01 times more volatile than Allegiant Travel. It trades about 0.07 of its potential returns per unit of risk. Allegiant Travel is currently generating about 0.03 per unit of risk. If you would invest 2,477 in Global E Online on October 7, 2024 and sell it today you would earn a total of 3,021 from holding Global E Online or generate 121.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global E Online vs. Allegiant Travel
Performance |
| Timeline |
| Global E Online |
| Allegiant Travel |
Global E and Allegiant Travel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global E and Allegiant Travel
The main advantage of trading using opposite Global E and Allegiant Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global E 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.| Global E vs. Alibaba Group Holding | Global E vs. Sea | Global E vs. Vipshop Holdings Limited | Global E vs. Amazon Inc |
| 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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