Correlation Between Juniata Valley and Allegiant Travel

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

By analyzing existing cross correlation between Juniata Valley Financial and Allegiant Travel, you can compare the effects of market volatilities on Juniata Valley 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 Juniata Valley with a short position of Allegiant Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Juniata Valley and Allegiant Travel.

Diversification Opportunities for Juniata Valley and Allegiant Travel

0.85

Correlation Coefficient

Juniata Valley  Allegiant Travel

Very poor diversification

The 3 months correlation between Juniata and Allegiant is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Juniata Valley Financial and Allegiant Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegiant Travel and Juniata Valley 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 Juniata Valley Financial 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 Juniata Valley i.e., Juniata Valley and Allegiant Travel go up and down completely randomly.

Pair Corralation between Juniata Valley and Allegiant Travel

Given the investment horizon of 90 days Juniata Valley Financial is expected to generate 1.61 times more return on investment than Allegiant Travel. However, Juniata Valley is 1.61 times more volatile than Allegiant Travel. It trades about 0.02 of its potential returns per unit of risk. Allegiant Travel is currently generating about 0.03 per unit of risk. If you would invest  1,398  in Juniata Valley Financial on September 20, 2024 and sell it today you would lose (73.00) from holding Juniata Valley Financial or give up 5.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	89.52%
Values	Daily Returns

Juniata Valley Financial  vs.  Allegiant Travel

Juniata Valley Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Juniata Valley Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Juniata Valley reported solid returns over the last few months and may actually be approaching a breakup point.

Allegiant Travel

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allegiant Travel are ranked lower than 23 (%) 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.

Pair Trading with Juniata Valley and Allegiant Travel

The main advantage of trading using opposite Juniata Valley and Allegiant Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Juniata Valley 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.

The idea behind Juniata Valley Financial and Allegiant Travel 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.