Correlation Between Inspirato and Trip Group

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

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

Diversification Opportunities for Inspirato and Trip Group

0.09

Correlation Coefficient

Inspirato  Trip Group

Significant diversification

The 3 months correlation between Inspirato and Trip is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Inspirato and Trip Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trip Group and Inspirato 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 Inspirato are associated (or correlated) with Trip Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trip Group has no effect on the direction of Inspirato i.e., Inspirato and Trip Group go up and down completely randomly.

Pair Corralation between Inspirato and Trip Group

Given the investment horizon of 90 days Inspirato is expected to generate 1.87 times more return on investment than Trip Group. However, Inspirato is 1.87 times more volatile than Trip Group Ltd. It trades about 0.1 of its potential returns per unit of risk. Trip Group Ltd is currently generating about -0.01 per unit of risk. If you would invest  338.00  in Inspirato on December 29, 2024 and sell it today you would earn a total of  104.00  from holding Inspirato or generate 30.77% return on investment over 90 days.

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

Inspirato  vs.  Trip Group Ltd

Inspirato

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inspirato are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Inspirato displayed solid returns over the last few months and may actually be approaching a breakup point.

Trip Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trip Group Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Trip Group is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Inspirato and Trip Group

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

The idea behind Inspirato and Trip Group Ltd 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.