Correlation Between Corporate Travel and Transurban
Can any of the company-specific risk be diversified away by investing in both Corporate Travel and Transurban 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 Corporate Travel and Transurban into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Travel Management and Transurban Group, you can compare the effects of market volatilities on Corporate Travel and Transurban 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 Corporate Travel with a short position of Transurban. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Travel and Transurban.
Diversification Opportunities for Corporate Travel and Transurban
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Corporate and Transurban is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Travel Management and Transurban Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transurban Group and Corporate 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 Corporate Travel Management are associated (or correlated) with Transurban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transurban Group has no effect on the direction of Corporate Travel i.e., Corporate Travel and Transurban go up and down completely randomly.
Pair Corralation between Corporate Travel and Transurban
Assuming the 90 days trading horizon Corporate Travel Management is expected to generate 1.31 times more return on investment than Transurban. However, Corporate Travel is 1.31 times more volatile than Transurban Group. It trades about 0.61 of its potential returns per unit of risk. Transurban Group is currently generating about 0.15 per unit of risk. If you would invest 690.00 in Corporate Travel Management on September 2, 2024 and sell it today you would earn a total of 165.00 from holding Corporate Travel Management or generate 23.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corporate Travel Management vs. Transurban Group
Performance |
| Timeline |
| Corporate Travel Man |
| Transurban Group |
Corporate Travel and Transurban Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Travel and Transurban
The main advantage of trading using opposite Corporate Travel and Transurban positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Travel position performs unexpectedly, Transurban 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 Transurban will offset losses from the drop in Transurban's long position.| Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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