Correlation Between IAC and Trivago NV
Can any of the company-specific risk be diversified away by investing in both IAC and Trivago NV 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 IAC and Trivago NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IAC Inc and Trivago NV, you can compare the effects of market volatilities on IAC and Trivago NV 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 IAC with a short position of Trivago NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAC and Trivago NV.
Diversification Opportunities for IAC and Trivago NV
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IAC and Trivago is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding IAC Inc and Trivago NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trivago NV and IAC 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 IAC Inc are associated (or correlated) with Trivago NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trivago NV has no effect on the direction of IAC i.e., IAC and Trivago NV go up and down completely randomly.
Pair Corralation between IAC and Trivago NV
Considering the 90-day investment horizon IAC Inc is expected to under-perform the Trivago NV. But the stock apears to be less risky and, when comparing its historical volatility, IAC Inc is 3.49 times less risky than Trivago NV. The stock trades about -0.11 of its potential returns per unit of risk. The Trivago NV is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 231.00 in Trivago NV on November 5, 2024 and sell it today you would earn a total of 52.00 from holding Trivago NV or generate 22.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IAC Inc vs. Trivago NV
Performance |
| Timeline |
| IAC Inc |
| Trivago NV |
IAC and Trivago NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAC and Trivago NV
The main advantage of trading using opposite IAC and Trivago NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAC position performs unexpectedly, Trivago NV 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 Trivago NV will offset losses from the drop in Trivago NV's long position.The idea behind IAC Inc and Trivago NV 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.| Trivago NV vs. Upexi Inc | Trivago NV vs. Cheetah Mobile | Trivago NV vs. Comscore | Trivago NV vs. EverQuote Class A |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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