Correlation Between Trump Media and Trivago NV

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

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

Diversification Opportunities for Trump Media and Trivago NV

-0.64

Correlation Coefficient

Trump Media  Trivago NV

Excellent diversification

The 3 months correlation between Trump and Trivago is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Trump Media Technology and Trivago NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trivago NV and Trump Media 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 Trump Media Technology are associated (or correlated) with Trivago NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trivago NV has no effect on the direction of Trump Media i.e., Trump Media and Trivago NV go up and down completely randomly.

Pair Corralation between Trump Media and Trivago NV

Assuming the 90 days horizon Trump Media Technology is expected to under-perform the Trivago NV. In addition to that, Trump Media is 1.18 times more volatile than Trivago NV. It trades about -0.09 of its total potential returns per unit of risk. Trivago NV is currently generating about 0.22 per unit of volatility. If you would invest  231.00  in Trivago NV on December 29, 2024 and sell it today you would earn a total of  242.00  from holding Trivago NV or generate 104.76% return on investment over 90 days.

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

Trump Media Technology  vs.  Trivago NV

Trump Media Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trump Media Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic 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.

Trivago NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Trivago NV are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Trivago NV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trump Media and Trivago NV

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

The idea behind Trump Media Technology and Trivago NV 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.