Correlation Between LATAM Airlines and Allegiant Travel
Can any of the company-specific risk be diversified away by investing in both LATAM Airlines 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 LATAM Airlines and Allegiant Travel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LATAM Airlines Group and Allegiant Travel, you can compare the effects of market volatilities on LATAM Airlines 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 LATAM Airlines with a short position of Allegiant Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of LATAM Airlines and Allegiant Travel.
Diversification Opportunities for LATAM Airlines and Allegiant Travel
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LATAM and Allegiant is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LATAM Airlines Group and Allegiant Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegiant Travel and LATAM Airlines 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 LATAM Airlines Group 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 LATAM Airlines i.e., LATAM Airlines and Allegiant Travel go up and down completely randomly.
Pair Corralation between LATAM Airlines and Allegiant Travel
If you would invest (100.00) in LATAM Airlines Group on November 18, 2024 and sell it today you would earn a total of 100.00 from holding LATAM Airlines Group or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
LATAM Airlines Group vs. Allegiant Travel
Performance |
| Timeline |
| LATAM Airlines Group |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Allegiant Travel |
LATAM Airlines and Allegiant Travel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LATAM Airlines and Allegiant Travel
The main advantage of trading using opposite LATAM Airlines and Allegiant Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LATAM Airlines 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.| LATAM Airlines vs. Azul SA | LATAM Airlines vs. Copa Holdings SA | LATAM Airlines vs. Volaris | LATAM Airlines vs. Mesa Air 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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