Correlation Between Fluent and Travelzoo

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

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

Diversification Opportunities for Fluent and Travelzoo

-0.59

Correlation Coefficient

Fluent  Travelzoo

Excellent diversification

The 3 months correlation between Fluent and Travelzoo is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Fluent Inc and Travelzoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travelzoo and Fluent 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 Fluent Inc 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 Fluent i.e., Fluent and Travelzoo go up and down completely randomly.

Pair Corralation between Fluent and Travelzoo

Given the investment horizon of 90 days Fluent Inc is expected to under-perform the Travelzoo. But the stock apears to be less risky and, when comparing its historical volatility, Fluent Inc is 1.11 times less risky than Travelzoo. The stock trades about -0.04 of its potential returns per unit of risk. The Travelzoo is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,982  in Travelzoo on September 23, 2024 and sell it today you would earn a total of  15.00  from holding Travelzoo or generate 0.76% return on investment over 90 days.

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

Fluent Inc  vs.  Travelzoo

Fluent Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fluent Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Travelzoo

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Travelzoo are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Travelzoo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fluent and Travelzoo

The main advantage of trading using opposite Fluent and Travelzoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fluent 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 Fluent Inc 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.