Correlation Between Cimpress and Travelzoo

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

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

Diversification Opportunities for Cimpress and Travelzoo

0.75

Correlation Coefficient

Cimpress  Travelzoo

Poor diversification

The 3 months correlation between Cimpress and Travelzoo is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cimpress NV and Travelzoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travelzoo and Cimpress 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 Cimpress NV 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 Cimpress i.e., Cimpress and Travelzoo go up and down completely randomly.

Pair Corralation between Cimpress and Travelzoo

Given the investment horizon of 90 days Cimpress NV is expected to under-perform the Travelzoo. But the stock apears to be less risky and, when comparing its historical volatility, Cimpress NV is 1.58 times less risky than Travelzoo. The stock trades about -0.24 of its potential returns per unit of risk. The Travelzoo is currently generating about -0.11 of returns per unit of risk over similar time horizon. 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	Significant
Accuracy	100.0%
Values	Daily Returns

Cimpress NV  vs.  Travelzoo

Cimpress NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cimpress NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail 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 Cimpress and Travelzoo

The main advantage of trading using opposite Cimpress and Travelzoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cimpress 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 Cimpress NV 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.