Correlation Between Travel Leisure and Amadeus IT
Can any of the company-specific risk be diversified away by investing in both Travel Leisure and Amadeus IT 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 Amadeus IT 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 Amadeus IT Holding, you can compare the effects of market volatilities on Travel Leisure and Amadeus IT 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 Amadeus IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travel Leisure and Amadeus IT.
Diversification Opportunities for Travel Leisure and Amadeus IT
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Travel and Amadeus is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Travel Leisure Co and Amadeus IT Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amadeus IT Holding 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 Amadeus IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amadeus IT Holding has no effect on the direction of Travel Leisure i.e., Travel Leisure and Amadeus IT go up and down completely randomly.
Pair Corralation between Travel Leisure and Amadeus IT
Considering the 90-day investment horizon Travel Leisure Co is expected to generate 1.42 times more return on investment than Amadeus IT. However, Travel Leisure is 1.42 times more volatile than Amadeus IT Holding. It trades about 0.06 of its potential returns per unit of risk. Amadeus IT Holding is currently generating about 0.01 per unit of risk. If you would invest 3,806 in Travel Leisure Co on August 31, 2024 and sell it today you would earn a total of 1,781 from holding Travel Leisure Co or generate 46.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Travel Leisure Co vs. Amadeus IT Holding
Performance |
| Timeline |
| Travel Leisure |
| Amadeus IT Holding |
Travel Leisure and Amadeus IT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travel Leisure and Amadeus IT
The main advantage of trading using opposite Travel Leisure and Amadeus IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travel Leisure position performs unexpectedly, Amadeus IT 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 Amadeus IT will offset losses from the drop in Amadeus IT's long position.| Travel Leisure vs. Yatra Online | Travel Leisure vs. Despegar Corp | Travel Leisure vs. Lindblad Expeditions Holdings | Travel Leisure vs. Mondee Holdings |
| Amadeus IT vs. Arma Services | Amadeus IT vs. Yatra Online | Amadeus IT vs. MakeMyTrip Limited | Amadeus IT vs. Tuniu Corp |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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