Correlation Between Allegiant Travel and Cadeler AS
Can any of the company-specific risk be diversified away by investing in both Allegiant Travel and Cadeler AS 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 Allegiant Travel and Cadeler AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegiant Travel and Cadeler AS, you can compare the effects of market volatilities on Allegiant Travel and Cadeler AS 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 Allegiant Travel with a short position of Cadeler AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegiant Travel and Cadeler AS.
Diversification Opportunities for Allegiant Travel and Cadeler AS
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Allegiant and Cadeler is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Allegiant Travel and Cadeler AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadeler AS and Allegiant Travel 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 Allegiant Travel are associated (or correlated) with Cadeler AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadeler AS has no effect on the direction of Allegiant Travel i.e., Allegiant Travel and Cadeler AS go up and down completely randomly.
Pair Corralation between Allegiant Travel and Cadeler AS
Given the investment horizon of 90 days Allegiant Travel is expected to generate 1.73 times more return on investment than Cadeler AS. However, Allegiant Travel is 1.73 times more volatile than Cadeler AS. It trades about 0.02 of its potential returns per unit of risk. Cadeler AS is currently generating about -0.23 per unit of risk. If you would invest 8,401 in Allegiant Travel on September 24, 2024 and sell it today you would earn a total of 46.00 from holding Allegiant Travel or generate 0.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Allegiant Travel vs. Cadeler AS
Performance |
Timeline |
Allegiant Travel |
Cadeler AS |
Allegiant Travel and Cadeler AS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Allegiant Travel and Cadeler AS
The main advantage of trading using opposite Allegiant Travel and Cadeler AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegiant Travel position performs unexpectedly, Cadeler AS 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 Cadeler AS will offset losses from the drop in Cadeler AS's long position.Allegiant Travel vs. Azul SA | Allegiant Travel vs. Alaska Air Group | Allegiant Travel vs. International Consolidated Airlines | Allegiant Travel vs. Sun Country Airlines |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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