Correlation Between Sun Country and Allegiant Travel
Can any of the company-specific risk be diversified away by investing in both Sun Country 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 Sun Country and Allegiant Travel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Country Airlines and Allegiant Travel, you can compare the effects of market volatilities on Sun Country 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 Sun Country with a short position of Allegiant Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and Allegiant Travel.
Diversification Opportunities for Sun Country and Allegiant Travel
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sun and Allegiant is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Allegiant Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegiant Travel and Sun Country 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 Sun Country Airlines 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 Sun Country i.e., Sun Country and Allegiant Travel go up and down completely randomly.
Pair Corralation between Sun Country and Allegiant Travel
Given the investment horizon of 90 days Sun Country is expected to generate 1.55 times less return on investment than Allegiant Travel. In addition to that, Sun Country is 1.08 times more volatile than Allegiant Travel. It trades about 0.16 of its total potential returns per unit of risk. Allegiant Travel is currently generating about 0.26 per unit of volatility. If you would invest 4,478 in Allegiant Travel on August 23, 2024 and sell it today you would earn a total of 3,039 from holding Allegiant Travel or generate 67.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Country Airlines vs. Allegiant Travel
Performance |
| Timeline |
| Sun Country Airlines |
| Allegiant Travel |
Sun Country and Allegiant Travel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Country and Allegiant Travel
The main advantage of trading using opposite Sun Country and Allegiant Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country 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.| Sun Country vs. Spirit Airlines | Sun Country vs. JetBlue Airways Corp | Sun Country vs. Allegiant Travel | Sun Country vs. Copa Holdings SA |
| 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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