Correlation Between AECOM TECHNOLOGY and TRAVEL +

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

By analyzing existing cross correlation between AECOM TECHNOLOGY and TRAVEL LEISURE DL 01, you can compare the effects of market volatilities on AECOM TECHNOLOGY and TRAVEL + 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 AECOM TECHNOLOGY with a short position of TRAVEL +. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM TECHNOLOGY and TRAVEL +.

Diversification Opportunities for AECOM TECHNOLOGY and TRAVEL +

0.91

Correlation Coefficient

AECOM TECHNOLOGY  TRAVEL +

Almost no diversification

The 3 months correlation between AECOM and TRAVEL is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY and TRAVEL LEISURE DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVEL LEISURE DL and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY are associated (or correlated) with TRAVEL +. 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 DL has no effect on the direction of AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and TRAVEL + go up and down completely randomly.

Pair Corralation between AECOM TECHNOLOGY and TRAVEL +

Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to generate 0.8 times more return on investment than TRAVEL +. However, AECOM TECHNOLOGY is 1.25 times less risky than TRAVEL +. It trades about -0.21 of its potential returns per unit of risk. TRAVEL LEISURE DL 01 is currently generating about -0.32 per unit of risk. If you would invest  10,673  in AECOM TECHNOLOGY on October 10, 2024 and sell it today you would lose (373.00) from holding AECOM TECHNOLOGY or give up 3.49% of portfolio value over 90 days.

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

AECOM TECHNOLOGY  vs.  TRAVEL LEISURE DL 01

AECOM TECHNOLOGY

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AECOM TECHNOLOGY are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, AECOM TECHNOLOGY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

TRAVEL LEISURE DL

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, TRAVEL + reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AECOM TECHNOLOGY and TRAVEL +

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

The idea behind AECOM TECHNOLOGY and TRAVEL LEISURE DL 01 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.