Correlation Between Allegiant Travel and FREEPORT

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

By analyzing existing cross correlation between Allegiant Travel and FREEPORT MCMORAN INC 525, you can compare the effects of market volatilities on Allegiant Travel and FREEPORT 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 FREEPORT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegiant Travel and FREEPORT.

Diversification Opportunities for Allegiant Travel and FREEPORT

-0.46

Correlation Coefficient

Allegiant Travel  FREEPORT

Very good diversification

The 3 months correlation between Allegiant and FREEPORT is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Allegiant Travel and FREEPORT MCMORAN INC 525 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FREEPORT MCMORAN INC 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 FREEPORT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FREEPORT MCMORAN INC has no effect on the direction of Allegiant Travel i.e., Allegiant Travel and FREEPORT go up and down completely randomly.

Pair Corralation between Allegiant Travel and FREEPORT

Given the investment horizon of 90 days Allegiant Travel is expected to generate 5.05 times more return on investment than FREEPORT. However, Allegiant Travel is 5.05 times more volatile than FREEPORT MCMORAN INC 525. It trades about 0.03 of its potential returns per unit of risk. FREEPORT MCMORAN INC 525 is currently generating about 0.01 per unit of risk. If you would invest  6,557  in Allegiant Travel on September 19, 2024 and sell it today you would earn a total of  1,528  from holding Allegiant Travel or generate 23.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Allegiant Travel  vs.  FREEPORT MCMORAN INC 525

Allegiant Travel

Risk-Adjusted Performance

24 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Allegiant Travel are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting technical and fundamental indicators, Allegiant Travel unveiled solid returns over the last few months and may actually be approaching a breakup point.

FREEPORT MCMORAN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FREEPORT MCMORAN INC 525 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FREEPORT is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Allegiant Travel and FREEPORT

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

The idea behind Allegiant Travel and FREEPORT MCMORAN INC 525 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.