Correlation Between Amadeus IT and Inspirato

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

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

Diversification Opportunities for Amadeus IT and Inspirato

-0.06

Correlation Coefficient

Amadeus IT  Inspirato

Good diversification

The 3 months correlation between Amadeus and Inspirato is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Amadeus IT Holding and Inspirato in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspirato and Amadeus IT 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 Amadeus IT Holding are associated (or correlated) with Inspirato. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspirato has no effect on the direction of Amadeus IT i.e., Amadeus IT and Inspirato go up and down completely randomly.

Pair Corralation between Amadeus IT and Inspirato

Assuming the 90 days horizon Amadeus IT Holding is expected to generate 0.29 times more return on investment than Inspirato. However, Amadeus IT Holding is 3.44 times less risky than Inspirato. It trades about 0.05 of its potential returns per unit of risk. Inspirato is currently generating about -0.03 per unit of risk. If you would invest  6,750  in Amadeus IT Holding on August 30, 2024 and sell it today you would earn a total of  204.00  from holding Amadeus IT Holding or generate 3.02% return on investment over 90 days.

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

Amadeus IT Holding  vs.  Inspirato

Amadeus IT Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amadeus IT Holding are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Amadeus IT is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Inspirato

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inspirato has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Amadeus IT and Inspirato

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

The idea behind Amadeus IT Holding and Inspirato 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..