Correlation Between Allegiant Travel and Celsius Holdings

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

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

Diversification Opportunities for Allegiant Travel and Celsius Holdings

-0.59

Correlation Coefficient

Allegiant Travel  Celsius Holdings

Excellent diversification

The 3 months correlation between Allegiant and Celsius is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Allegiant Travel and Celsius Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celsius Holdings 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 Celsius Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celsius Holdings has no effect on the direction of Allegiant Travel i.e., Allegiant Travel and Celsius Holdings go up and down completely randomly.

Pair Corralation between Allegiant Travel and Celsius Holdings

Given the investment horizon of 90 days Allegiant Travel is expected to generate 0.83 times more return on investment than Celsius Holdings. However, Allegiant Travel is 1.21 times less risky than Celsius Holdings. It trades about 0.3 of its potential returns per unit of risk. Celsius Holdings is currently generating about -0.05 per unit of risk. If you would invest  4,615  in Allegiant Travel on September 23, 2024 and sell it today you would earn a total of  3,832  from holding Allegiant Travel or generate 83.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Allegiant Travel  vs.  Celsius Holdings

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.

Celsius Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celsius Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Allegiant Travel and Celsius Holdings

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

The idea behind Allegiant Travel and Celsius Holdings 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.