Correlation Between Allegiant Travel and Affiliated Resources

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

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

Diversification Opportunities for Allegiant Travel and Affiliated Resources

-0.67

Correlation Coefficient

Allegiant Travel  Affiliated Resources

Excellent diversification

The 3 months correlation between Allegiant and Affiliated is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Allegiant Travel and Affiliated Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Resources Corp 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 Affiliated Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affiliated Resources Corp has no effect on the direction of Allegiant Travel i.e., Allegiant Travel and Affiliated Resources go up and down completely randomly.

Pair Corralation between Allegiant Travel and Affiliated Resources

Given the investment horizon of 90 days Allegiant Travel is expected to generate 193.43 times less return on investment than Affiliated Resources. But when comparing it to its historical volatility, Allegiant Travel is 15.51 times less risky than Affiliated Resources. It trades about 0.01 of its potential returns per unit of risk. Affiliated Resources Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.08  in Affiliated Resources Corp on September 14, 2024 and sell it today you would earn a total of  8.80  from holding Affiliated Resources Corp or generate 11000.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.75%
Values	Daily Returns

Allegiant Travel  vs.  Affiliated Resources Corp

Allegiant Travel

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Allegiant Travel are ranked lower than 29 (%) 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.

Affiliated Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Affiliated Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Affiliated Resources is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Allegiant Travel and Affiliated Resources

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

The idea behind Allegiant Travel and Affiliated Resources Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.