Correlation Between Allegiant Travel and Gaxosai

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

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

Diversification Opportunities for Allegiant Travel and Gaxosai

0.07

Correlation Coefficient

Allegiant Travel  Gaxosai

Significant diversification

The 3 months correlation between Allegiant and Gaxosai is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Allegiant Travel and Gaxosai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaxosai 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 Gaxosai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaxosai has no effect on the direction of Allegiant Travel i.e., Allegiant Travel and Gaxosai go up and down completely randomly.

Pair Corralation between Allegiant Travel and Gaxosai

Given the investment horizon of 90 days Allegiant Travel is expected to generate 0.24 times more return on investment than Gaxosai. However, Allegiant Travel is 4.11 times less risky than Gaxosai. It trades about 0.03 of its potential returns per unit of risk. Gaxosai is currently generating about 0.01 per unit of risk. If you would invest  6,298  in Allegiant Travel on September 14, 2024 and sell it today you would earn a total of  2,210  from holding Allegiant Travel or generate 35.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.13%
Values	Daily Returns

Allegiant Travel  vs.  Gaxosai

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.

Gaxosai

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gaxosai are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Gaxosai demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allegiant Travel and Gaxosai

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

The idea behind Allegiant Travel and Gaxosai 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.