Correlation Between TripAdvisor and Sabre

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

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

Diversification Opportunities for TripAdvisor and Sabre

0.0

Correlation Coefficient

TripAdvisor  Sabre

Pay attention - limited upside

The 3 months correlation between TripAdvisor and Sabre is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TripAdvisor and Sabre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre and TripAdvisor 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 TripAdvisor are associated (or correlated) with Sabre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre has no effect on the direction of TripAdvisor i.e., TripAdvisor and Sabre go up and down completely randomly.

Pair Corralation between TripAdvisor and Sabre

Given the investment horizon of 90 days TripAdvisor is expected to generate 0.74 times more return on investment than Sabre. However, TripAdvisor is 1.35 times less risky than Sabre. It trades about -0.01 of its potential returns per unit of risk. Sabre is currently generating about -0.06 per unit of risk. If you would invest  2,169  in TripAdvisor on October 7, 2024 and sell it today you would lose (670.00) from holding TripAdvisor or give up 30.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	26.21%
Values	Daily Returns

TripAdvisor  vs.  Sabre

TripAdvisor

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TripAdvisor are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile forward indicators, TripAdvisor may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sabre

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sabre has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Sabre is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with TripAdvisor and Sabre

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

The idea behind TripAdvisor and Sabre 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.