Correlation Between Allegiant Travel and Celestica

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

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

Diversification Opportunities for Allegiant Travel and Celestica

0.94

Correlation Coefficient

Allegiant Travel  Celestica

Almost no diversification

The 3 months correlation between Allegiant and Celestica is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Allegiant Travel and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica 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 Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of Allegiant Travel i.e., Allegiant Travel and Celestica go up and down completely randomly.

Pair Corralation between Allegiant Travel and Celestica

Given the investment horizon of 90 days Allegiant Travel is expected to generate 4.02 times less return on investment than Celestica. In addition to that, Allegiant Travel is 1.08 times more volatile than Celestica. It trades about 0.04 of its total potential returns per unit of risk. Celestica is currently generating about 0.16 per unit of volatility. If you would invest  1,084  in Celestica on September 14, 2024 and sell it today you would earn a total of  8,017  from holding Celestica or generate 739.58% return on investment over 90 days.

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

Allegiant Travel  vs.  Celestica

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.

Celestica

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allegiant Travel and Celestica

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

The idea behind Allegiant Travel and Celestica 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.