Correlation Between Summit Materials and Allegiant Travel
Can any of the company-specific risk be diversified away by investing in both Summit Materials 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 Summit Materials and Allegiant Travel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Allegiant Travel, you can compare the effects of market volatilities on Summit Materials 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 Summit Materials with a short position of Allegiant Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Allegiant Travel.
Diversification Opportunities for Summit Materials and Allegiant Travel
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Summit and Allegiant is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Allegiant Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegiant Travel and Summit Materials 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 Summit Materials 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 Summit Materials i.e., Summit Materials and Allegiant Travel go up and down completely randomly.
Pair Corralation between Summit Materials and Allegiant Travel
Considering the 90-day investment horizon Summit Materials is expected to generate 0.67 times more return on investment than Allegiant Travel. However, Summit Materials is 1.5 times less risky than Allegiant Travel. It trades about 0.06 of its potential returns per unit of risk. Allegiant Travel is currently generating about 0.01 per unit of risk. If you would invest 3,601 in Summit Materials on September 12, 2024 and sell it today you would earn a total of 1,500 from holding Summit Materials or generate 41.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. Allegiant Travel
Performance |
| Timeline |
| Summit Materials |
| Allegiant Travel |
Summit Materials and Allegiant Travel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Allegiant Travel
The main advantage of trading using opposite Summit Materials and Allegiant Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials 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.| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
| Allegiant Travel vs. Volaris | Allegiant Travel vs. flyExclusive, | Allegiant Travel vs. Alaska Air Group | Allegiant Travel vs. Copa Holdings SA |
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 Stocks Directory module to find actively traded stocks across global markets.
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