Correlation Between Allegiant Travel and KINDER

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

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

Diversification Opportunities for Allegiant Travel and KINDER

-0.58

Correlation Coefficient

Allegiant Travel  KINDER

Excellent diversification

The 3 months correlation between Allegiant and KINDER is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Allegiant Travel and KINDER MORGAN ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN ENERGY 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 KINDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINDER MORGAN ENERGY has no effect on the direction of Allegiant Travel i.e., Allegiant Travel and KINDER go up and down completely randomly.

Pair Corralation between Allegiant Travel and KINDER

Given the investment horizon of 90 days Allegiant Travel is expected to under-perform the KINDER. In addition to that, Allegiant Travel is 2.74 times more volatile than KINDER MORGAN ENERGY. It trades about -0.2 of its total potential returns per unit of risk. KINDER MORGAN ENERGY is currently generating about 0.0 per unit of volatility. If you would invest  9,464  in KINDER MORGAN ENERGY on December 25, 2024 and sell it today you would lose (30.00) from holding KINDER MORGAN ENERGY or give up 0.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	81.36%
Values	Daily Returns

Allegiant Travel  vs.  KINDER MORGAN ENERGY

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 conflicting performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

KINDER MORGAN ENERGY

Risk-Adjusted Performance

Weak

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

Pair Trading with Allegiant Travel and KINDER

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

The idea behind Allegiant Travel and KINDER MORGAN ENERGY 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.