Correlation Between Cornish Metals and Travel Leisure

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

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

Diversification Opportunities for Cornish Metals and Travel Leisure

-0.18

Correlation Coefficient

Cornish Metals  Travel Leisure

Good diversification

The 3 months correlation between Cornish and Travel is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cornish Metals and Travel Leisure Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travel Leisure and Cornish Metals 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 Cornish Metals are associated (or correlated) with Travel Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Travel Leisure has no effect on the direction of Cornish Metals i.e., Cornish Metals and Travel Leisure go up and down completely randomly.

Pair Corralation between Cornish Metals and Travel Leisure

Assuming the 90 days trading horizon Cornish Metals is expected to generate 3.56 times more return on investment than Travel Leisure. However, Cornish Metals is 3.56 times more volatile than Travel Leisure Co. It trades about 0.02 of its potential returns per unit of risk. Travel Leisure Co is currently generating about 0.02 per unit of risk. If you would invest  975.00  in Cornish Metals on October 9, 2024 and sell it today you would lose (50.00) from holding Cornish Metals or give up 5.13% of portfolio value over 90 days.

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

Cornish Metals  vs.  Travel Leisure Co

Cornish Metals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cornish Metals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cornish Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Travel Leisure

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Travel Leisure Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Cornish Metals and Travel Leisure

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

The idea behind Cornish Metals and Travel Leisure Co 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..