Correlation Between Trip Group and Inspirato

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

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

Diversification Opportunities for Trip Group and Inspirato

0.12

Correlation Coefficient

Trip Group  Inspirato

Average diversification

The 3 months correlation between Trip and Inspirato is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Trip Group Ltd and Inspirato in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspirato and Trip Group 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 Trip Group Ltd are associated (or correlated) with Inspirato. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspirato has no effect on the direction of Trip Group i.e., Trip Group and Inspirato go up and down completely randomly.

Pair Corralation between Trip Group and Inspirato

Given the investment horizon of 90 days Trip Group Ltd is expected to under-perform the Inspirato. But the stock apears to be less risky and, when comparing its historical volatility, Trip Group Ltd is 1.85 times less risky than Inspirato. The stock trades about -0.03 of its potential returns per unit of risk. The Inspirato is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  338.00  in Inspirato on December 30, 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

Trip Group Ltd  vs.  Inspirato

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.

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.

Pair Trading with Trip Group and Inspirato

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

The idea behind Trip Group Ltd and Inspirato 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.