Correlation Between Alliant Energy and Allegiant Travel
Can any of the company-specific risk be diversified away by investing in both Alliant Energy 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 Alliant Energy and Allegiant Travel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliant Energy Corp and Allegiant Travel, you can compare the effects of market volatilities on Alliant Energy 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 Alliant Energy with a short position of Allegiant Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliant Energy and Allegiant Travel.
Diversification Opportunities for Alliant Energy and Allegiant Travel
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alliant and Allegiant is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Alliant Energy Corp and Allegiant Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegiant Travel and Alliant Energy 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 Alliant Energy 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 Alliant Energy i.e., Alliant Energy and Allegiant Travel go up and down completely randomly.
Pair Corralation between Alliant Energy and Allegiant Travel
Considering the 90-day investment horizon Alliant Energy is expected to generate 2.27 times less return on investment than Allegiant Travel. But when comparing it to its historical volatility, Alliant Energy Corp is 3.48 times less risky than Allegiant Travel. It trades about 0.16 of its potential returns per unit of risk. Allegiant Travel is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,359 in Allegiant Travel on September 3, 2024 and sell it today you would earn a total of 2,718 from holding Allegiant Travel or generate 50.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alliant Energy Corp vs. Allegiant Travel
Performance |
| Timeline |
| Alliant Energy Corp |
| Allegiant Travel |
Alliant Energy and Allegiant Travel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliant Energy and Allegiant Travel
The main advantage of trading using opposite Alliant Energy and Allegiant Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliant Energy 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.| Alliant Energy vs. DTE Energy | Alliant Energy vs. Ameren Corp | Alliant Energy vs. CenterPoint Energy | Alliant Energy vs. Pinnacle West Capital |
| Allegiant Travel vs. Copa Holdings SA | Allegiant Travel vs. SkyWest | Allegiant Travel vs. Air Transport Services | Allegiant Travel vs. Mesa Air 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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