Correlation Between Alior Bank and Travel Leisure
Can any of the company-specific risk be diversified away by investing in both Alior Bank and Travel Leisure 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 Alior Bank and Travel Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alior Bank SA and Travel Leisure Co, you can compare the effects of market volatilities on Alior Bank and Travel Leisure 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 Alior Bank with a short position of Travel Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alior Bank and Travel Leisure.
Diversification Opportunities for Alior Bank and Travel Leisure
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Alior and Travel is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and Travel Leisure Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travel Leisure and Alior Bank 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 Alior Bank SA are associated (or correlated) with Travel Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Travel Leisure has no effect on the direction of Alior Bank i.e., Alior Bank and Travel Leisure go up and down completely randomly.
Pair Corralation between Alior Bank and Travel Leisure
Assuming the 90 days trading horizon Alior Bank is expected to generate 1.47 times less return on investment than Travel Leisure. In addition to that, Alior Bank is 1.67 times more volatile than Travel Leisure Co. It trades about 0.01 of its total potential returns per unit of risk. Travel Leisure Co is currently generating about 0.02 per unit of volatility. If you would invest 5,446 in Travel Leisure Co on November 2, 2024 and sell it today you would earn a total of 369.00 from holding Travel Leisure Co or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alior Bank SA vs. Travel Leisure Co
Performance |
| Timeline |
| Alior Bank SA |
| Travel Leisure |
Alior Bank and Travel Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alior Bank and Travel Leisure
The main advantage of trading using opposite Alior Bank and Travel Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alior Bank position performs unexpectedly, Travel Leisure 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 Travel Leisure will offset losses from the drop in Travel Leisure's long position.| Alior Bank vs. Grieg Seafood | Alior Bank vs. Associated British Foods | Alior Bank vs. Gruppo MutuiOnline SpA | Alior Bank vs. JB Hunt Transport |
| Travel Leisure vs. Regions Financial Corp | Travel Leisure vs. Bank of Ireland | Travel Leisure vs. Applied Materials | Travel Leisure vs. Martin Marietta Materials |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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