Correlation Between Allegiant Travel and Hawaiian Holdings

Can any of the company-specific risk be diversified away by investing in both Allegiant Travel and Hawaiian Holdings 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 Hawaiian Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allegiant Travel and Hawaiian Holdings, you can compare the effects of market volatilities on Allegiant Travel and Hawaiian Holdings 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 Hawaiian Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegiant Travel and Hawaiian Holdings.

Diversification Opportunities for Allegiant Travel and Hawaiian Holdings

0.0

Correlation Coefficient

Allegiant Travel  Hawaiian Holdings

Pay attention - limited upside

The 3 months correlation between Allegiant and Hawaiian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Allegiant Travel and Hawaiian Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawaiian Holdings 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 Hawaiian Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawaiian Holdings has no effect on the direction of Allegiant Travel i.e., Allegiant Travel and Hawaiian Holdings go up and down completely randomly.

Pair Corralation between Allegiant Travel and Hawaiian Holdings

If you would invest (100.00) in Hawaiian Holdings on November 28, 2024 and sell it today you would earn a total of  100.00  from holding Hawaiian Holdings 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

Allegiant Travel  vs.  Hawaiian Holdings

Allegiant Travel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allegiant Travel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Allegiant Travel is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Hawaiian Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hawaiian Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hawaiian Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Allegiant Travel and Hawaiian Holdings

The main advantage of trading using opposite Allegiant Travel and Hawaiian Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegiant Travel position performs unexpectedly, Hawaiian Holdings 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 Hawaiian Holdings will offset losses from the drop in Hawaiian Holdings' long position.

The idea behind Allegiant Travel and Hawaiian Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.