Correlation Between Precision Drilling and Allegiant Travel

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Precision Drilling 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 Precision Drilling and Allegiant Travel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precision Drilling and Allegiant Travel, you can compare the effects of market volatilities on Precision Drilling 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 Precision Drilling with a short position of Allegiant Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precision Drilling and Allegiant Travel.

Diversification Opportunities for Precision Drilling and Allegiant Travel

PrecisionAllegiantDiversified AwayPrecisionAllegiantDiversified Away100%
0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Precision and Allegiant is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and Allegiant Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegiant Travel and Precision Drilling 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 Precision Drilling 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 Precision Drilling i.e., Precision Drilling and Allegiant Travel go up and down completely randomly.

Pair Corralation between Precision Drilling and Allegiant Travel

Considering the 90-day investment horizon Precision Drilling is expected to generate 6.53 times less return on investment than Allegiant Travel. But when comparing it to its historical volatility, Precision Drilling is 1.4 times less risky than Allegiant Travel. It trades about 0.05 of its potential returns per unit of risk. Allegiant Travel is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  6,238  in Allegiant Travel on October 16, 2024 and sell it today you would earn a total of  3,487  from holding Allegiant Travel or generate 55.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Precision Drilling  vs.  Allegiant Travel

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 0204060
JavaScript chart by amCharts 3.21.15PDS ALGT
       Timeline  
Precision Drilling 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Precision Drilling are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Precision Drilling may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan56586062646668
Allegiant Travel 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Allegiant Travel are ranked lower than 19 (%) 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan60708090100

Precision Drilling and Allegiant Travel Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.15-5.35-3.56-1.760.01.773.575.367.16 0.020.030.040.050.060.070.08
JavaScript chart by amCharts 3.21.15PDS ALGT
       Returns  

Pair Trading with Precision Drilling and Allegiant Travel

The main advantage of trading using opposite Precision Drilling and Allegiant Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision Drilling 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 Precision Drilling 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.
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

Other Complementary Tools

Commodity Directory
Find actively traded commodities issued by global exchanges
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes