Correlation Between Allegiant Travel and Cartier Iron

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

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

Diversification Opportunities for Allegiant Travel and Cartier Iron

-0.76

Correlation Coefficient

Allegiant Travel  Cartier Iron

Pay attention - limited upside

The 3 months correlation between Allegiant and Cartier is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Allegiant Travel and Cartier Iron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cartier Iron 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 Cartier Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cartier Iron Corp has no effect on the direction of Allegiant Travel i.e., Allegiant Travel and Cartier Iron go up and down completely randomly.

Pair Corralation between Allegiant Travel and Cartier Iron

Given the investment horizon of 90 days Allegiant Travel is expected to generate 3.76 times less return on investment than Cartier Iron. But when comparing it to its historical volatility, Allegiant Travel is 15.8 times less risky than Cartier Iron. It trades about 0.37 of its potential returns per unit of risk. Cartier Iron Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Cartier Iron Corp on September 13, 2024 and sell it today you would lose (7.00) from holding Cartier Iron Corp or give up 63.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Allegiant Travel  vs.  Cartier Iron Corp

Allegiant Travel

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Allegiant Travel are ranked lower than 28 (%) 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.

Cartier Iron Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cartier Iron Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, Cartier Iron reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allegiant Travel and Cartier Iron

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

The idea behind Allegiant Travel and Cartier Iron 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.