Correlation Between Keurig Dr and Allegiant Travel
Can any of the company-specific risk be diversified away by investing in both Keurig Dr 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 Keurig Dr and Allegiant Travel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keurig Dr Pepper and Allegiant Travel, you can compare the effects of market volatilities on Keurig Dr 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 Keurig Dr with a short position of Allegiant Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keurig Dr and Allegiant Travel.
Diversification Opportunities for Keurig Dr and Allegiant Travel
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Keurig and Allegiant is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and Allegiant Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegiant Travel and Keurig Dr 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 Keurig Dr Pepper 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 Keurig Dr i.e., Keurig Dr and Allegiant Travel go up and down completely randomly.
Pair Corralation between Keurig Dr and Allegiant Travel
Considering the 90-day investment horizon Keurig Dr is expected to generate 3.79 times less return on investment than Allegiant Travel. But when comparing it to its historical volatility, Keurig Dr Pepper is 3.02 times less risky than Allegiant Travel. It trades about 0.03 of its potential returns per unit of risk. Allegiant Travel is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,840 in Allegiant Travel on September 14, 2024 and sell it today you would earn a total of 1,668 from holding Allegiant Travel or generate 24.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keurig Dr Pepper vs. Allegiant Travel
Performance |
| Timeline |
| Keurig Dr Pepper |
| Allegiant Travel |
Keurig Dr and Allegiant Travel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keurig Dr and Allegiant Travel
The main advantage of trading using opposite Keurig Dr and Allegiant Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keurig Dr 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.| Keurig Dr vs. Coca Cola Femsa SAB | Keurig Dr vs. Embotelladora Andina SA | Keurig Dr vs. Coca Cola European Partners | Keurig Dr vs. Coca Cola Consolidated |
| 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 CEOs Directory module to screen CEOs from public companies around the world.
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