Correlation Between BYD and Travel Leisure
Can any of the company-specific risk be diversified away by investing in both BYD 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 BYD and Travel Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD Co and Travel Leisure Co, you can compare the effects of market volatilities on BYD 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 BYD with a short position of Travel Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD and Travel Leisure.
Diversification Opportunities for BYD and Travel Leisure
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between BYD and Travel is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co and Travel Leisure Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travel Leisure and BYD 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 BYD Co 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 BYD i.e., BYD and Travel Leisure go up and down completely randomly.
Pair Corralation between BYD and Travel Leisure
Assuming the 90 days trading horizon BYD Co is expected to generate 0.92 times more return on investment than Travel Leisure. However, BYD Co is 1.08 times less risky than Travel Leisure. It trades about 0.06 of its potential returns per unit of risk. Travel Leisure Co is currently generating about 0.03 per unit of risk. If you would invest 3,456 in BYD Co on October 10, 2024 and sell it today you would earn a total of 104.00 from holding BYD Co or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD Co vs. Travel Leisure Co
Performance |
| Timeline |
| BYD Co |
| Travel Leisure |
BYD and Travel Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD and Travel Leisure
The main advantage of trading using opposite BYD and Travel Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD 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.| BYD vs. Panther Metals PLC | BYD vs. First Class Metals | BYD vs. CNH Industrial NV | BYD vs. Kinnevik Investment AB |
| Travel Leisure vs. Alfa Financial Software | Travel Leisure vs. UNIQA Insurance Group | Travel Leisure vs. Premier Foods PLC | Travel Leisure vs. Ecclesiastical Insurance Office |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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