Correlation Between Travel Leisure and Gaztransport
Can any of the company-specific risk be diversified away by investing in both Travel Leisure and Gaztransport 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 Travel Leisure and Gaztransport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Travel Leisure Co and Gaztransport et Technigaz, you can compare the effects of market volatilities on Travel Leisure and Gaztransport 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 Travel Leisure with a short position of Gaztransport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travel Leisure and Gaztransport.
Diversification Opportunities for Travel Leisure and Gaztransport
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travel and Gaztransport is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Travel Leisure Co and Gaztransport et Technigaz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport et Technigaz and Travel Leisure 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 Travel Leisure Co are associated (or correlated) with Gaztransport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport et Technigaz has no effect on the direction of Travel Leisure i.e., Travel Leisure and Gaztransport go up and down completely randomly.
Pair Corralation between Travel Leisure and Gaztransport
Assuming the 90 days trading horizon Travel Leisure Co is expected to generate 5.94 times more return on investment than Gaztransport. However, Travel Leisure is 5.94 times more volatile than Gaztransport et Technigaz. It trades about 0.1 of its potential returns per unit of risk. Gaztransport et Technigaz is currently generating about 0.04 per unit of risk. If you would invest 4,367 in Travel Leisure Co on September 21, 2024 and sell it today you would earn a total of 1,448 from holding Travel Leisure Co or generate 33.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Travel Leisure Co vs. Gaztransport et Technigaz
Performance |
| Timeline |
| Travel Leisure |
| Gaztransport et Technigaz |
Travel Leisure and Gaztransport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travel Leisure and Gaztransport
The main advantage of trading using opposite Travel Leisure and Gaztransport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travel Leisure position performs unexpectedly, Gaztransport 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 Gaztransport will offset losses from the drop in Gaztransport's long position.| Travel Leisure vs. Waste Management | Travel Leisure vs. EVS Broadcast Equipment | Travel Leisure vs. Universal Music Group | Travel Leisure vs. Eastman Chemical Co |
| Gaztransport vs. British American Tobacco | Gaztransport vs. Eastinco Mining Exploration | Gaztransport vs. Hochschild Mining plc | Gaztransport vs. Systemair AB |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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