Correlation Between TRAVEL + and TRIP GROUP
Can any of the company-specific risk be diversified away by investing in both TRAVEL + and TRIP GROUP 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 + and TRIP GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAVEL LEISURE DL 01 and TRIPCOM GROUP DL 00125, you can compare the effects of market volatilities on TRAVEL + and TRIP GROUP 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 + with a short position of TRIP GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL + and TRIP GROUP.
Diversification Opportunities for TRAVEL + and TRIP GROUP
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TRAVEL and TRIP is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and TRIPCOM GROUP DL 00125 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRIPCOM GROUP DL and 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 TRAVEL LEISURE DL 01 are associated (or correlated) with TRIP GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRIPCOM GROUP DL has no effect on the direction of TRAVEL + i.e., TRAVEL + and TRIP GROUP go up and down completely randomly.
Pair Corralation between TRAVEL + and TRIP GROUP
Assuming the 90 days trading horizon TRAVEL + is expected to generate 1.47 times less return on investment than TRIP GROUP. But when comparing it to its historical volatility, TRAVEL LEISURE DL 01 is 2.21 times less risky than TRIP GROUP. It trades about 0.31 of its potential returns per unit of risk. TRIPCOM GROUP DL 00125 is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 3,968 in TRIPCOM GROUP DL 00125 on August 28, 2024 and sell it today you would earn a total of 2,132 from holding TRIPCOM GROUP DL 00125 or generate 53.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRAVEL LEISURE DL 01 vs. TRIPCOM GROUP DL 00125
Performance |
| Timeline |
| TRAVEL LEISURE DL |
| TRIPCOM GROUP DL |
TRAVEL + and TRIP GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRAVEL + and TRIP GROUP
The main advantage of trading using opposite TRAVEL + and TRIP GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAVEL + position performs unexpectedly, TRIP GROUP 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 TRIP GROUP will offset losses from the drop in TRIP GROUP's long position.| TRAVEL + vs. Superior Plus Corp | TRAVEL + vs. NMI Holdings | TRAVEL + vs. Origin Agritech | TRAVEL + vs. SIVERS SEMICONDUCTORS AB |
| TRIP GROUP vs. United Rentals | TRIP GROUP vs. Commonwealth Bank of | TRIP GROUP vs. OAKTRSPECLENDNEW | TRIP GROUP vs. UNITED RENTALS |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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