Correlation Between Travel + and Livermore Investments

Can any of the company-specific risk be diversified away by investing in both Travel + and Livermore Investments 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 Livermore Investments 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 Livermore Investments Group, you can compare the effects of market volatilities on Travel + and Livermore Investments 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 Livermore Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travel + and Livermore Investments.

Diversification Opportunities for Travel + and Livermore Investments

0.49

Correlation Coefficient

Travel +  Livermore Investments

Very weak diversification

The 3 months correlation between Travel and Livermore is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Travel Leisure Co and Livermore Investments Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livermore Investments 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 Co are associated (or correlated) with Livermore Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livermore Investments has no effect on the direction of Travel + i.e., Travel + and Livermore Investments go up and down completely randomly.

Pair Corralation between Travel + and Livermore Investments

Assuming the 90 days trading horizon Travel + is expected to generate 30.46 times less return on investment than Livermore Investments. But when comparing it to its historical volatility, Travel Leisure Co is 21.73 times less risky than Livermore Investments. It trades about 0.13 of its potential returns per unit of risk. Livermore Investments Group is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  5,400  in Livermore Investments Group on December 24, 2024 and sell it today you would earn a total of  1,700  from holding Livermore Investments Group or generate 31.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Travel Leisure Co  vs.  Livermore Investments Group

Travel Leisure

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Travel Leisure Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Travel + is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Livermore Investments

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Livermore Investments Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Livermore Investments exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Travel + and Livermore Investments

The main advantage of trading using opposite Travel + and Livermore Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travel + position performs unexpectedly, Livermore Investments 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 Livermore Investments will offset losses from the drop in Livermore Investments' long position.

The idea behind Travel Leisure Co and Livermore Investments Group 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.