Correlation Between Corporate Travel and Broadwind

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

Diversification Opportunities for Corporate Travel and Broadwind

-0.59

Correlation Coefficient

Corporate Travel  Broadwind

Excellent diversification

The 3 months correlation between Corporate and Broadwind is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Travel Management and Broadwind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadwind 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 Broadwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadwind has no effect on the direction of Corporate Travel i.e., Corporate Travel and Broadwind go up and down completely randomly.

Pair Corralation between Corporate Travel and Broadwind

Assuming the 90 days trading horizon Corporate Travel is expected to generate 2.22 times less return on investment than Broadwind. But when comparing it to its historical volatility, Corporate Travel Management is 1.66 times less risky than Broadwind. It trades about 0.01 of its potential returns per unit of risk. Broadwind is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  194.00  in Broadwind on October 10, 2024 and sell it today you would lose (2.00) from holding Broadwind or give up 1.03% of portfolio value over 90 days.

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

Corporate Travel Management  vs.  Broadwind

Corporate Travel Man

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Corporate Travel Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Corporate Travel is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Broadwind

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Broadwind are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Broadwind is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Corporate Travel and Broadwind

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

The idea behind Corporate Travel Management and Broadwind 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.

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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.