Correlation Between JetBlue Airways and Allegiant Travel
Can any of the company-specific risk be diversified away by investing in both JetBlue Airways 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 JetBlue Airways and Allegiant Travel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JetBlue Airways Corp and Allegiant Travel, you can compare the effects of market volatilities on JetBlue Airways 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 JetBlue Airways with a short position of Allegiant Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of JetBlue Airways and Allegiant Travel.
Diversification Opportunities for JetBlue Airways and Allegiant Travel
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JetBlue and Allegiant is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding JetBlue Airways Corp and Allegiant Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegiant Travel and JetBlue Airways 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 JetBlue Airways Corp 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 JetBlue Airways i.e., JetBlue Airways and Allegiant Travel go up and down completely randomly.
Pair Corralation between JetBlue Airways and Allegiant Travel
Given the investment horizon of 90 days JetBlue Airways Corp is expected to under-perform the Allegiant Travel. In addition to that, JetBlue Airways is 1.47 times more volatile than Allegiant Travel. It trades about -0.12 of its total potential returns per unit of risk. Allegiant Travel is currently generating about 0.23 per unit of volatility. If you would invest 6,287 in Allegiant Travel on August 23, 2024 and sell it today you would earn a total of 1,230 from holding Allegiant Travel or generate 19.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JetBlue Airways Corp vs. Allegiant Travel
Performance |
| Timeline |
| JetBlue Airways Corp |
| Allegiant Travel |
JetBlue Airways and Allegiant Travel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JetBlue Airways and Allegiant Travel
The main advantage of trading using opposite JetBlue Airways and Allegiant Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JetBlue Airways 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.| JetBlue Airways vs. Frontier Group Holdings | JetBlue Airways vs. Southwest Airlines | JetBlue Airways vs. United Airlines Holdings | JetBlue Airways vs. American Airlines Group |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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