Correlation Between Advantage Solutions and Travelzoo

Can any of the company-specific risk be diversified away by investing in both Advantage Solutions and Travelzoo 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 Advantage Solutions and Travelzoo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Advantage Solutions and Travelzoo, you can compare the effects of market volatilities on Advantage Solutions and Travelzoo 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 Advantage Solutions with a short position of Travelzoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantage Solutions and Travelzoo.

Diversification Opportunities for Advantage Solutions and Travelzoo

0.82

Correlation Coefficient

Advantage Solutions  Travelzoo

Very poor diversification

The 3 months correlation between Advantage and Travelzoo is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Solutions and Travelzoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travelzoo and Advantage Solutions 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 Advantage Solutions are associated (or correlated) with Travelzoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Travelzoo has no effect on the direction of Advantage Solutions i.e., Advantage Solutions and Travelzoo go up and down completely randomly.

Pair Corralation between Advantage Solutions and Travelzoo

Considering the 90-day investment horizon Advantage Solutions is expected to under-perform the Travelzoo. In addition to that, Advantage Solutions is 1.03 times more volatile than Travelzoo. It trades about -0.2 of its total potential returns per unit of risk. Travelzoo is currently generating about -0.11 per unit of volatility. If you would invest  1,985  in Travelzoo on December 30, 2024 and sell it today you would lose (623.00) from holding Travelzoo or give up 31.39% of portfolio value over 90 days.

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

Advantage Solutions  vs.  Travelzoo

Advantage Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advantage Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Travelzoo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Travelzoo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Advantage Solutions and Travelzoo

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

The idea behind Advantage Solutions and Travelzoo 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.