Correlation Between Travelzoo and Impact Fusion

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

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

Diversification Opportunities for Travelzoo and Impact Fusion

-0.87

Correlation Coefficient

Travelzoo  Impact Fusion

Pay attention - limited upside

The 3 months correlation between Travelzoo and Impact is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Travelzoo and Impact Fusion International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impact Fusion Intern and Travelzoo 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 Travelzoo are associated (or correlated) with Impact Fusion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impact Fusion Intern has no effect on the direction of Travelzoo i.e., Travelzoo and Impact Fusion go up and down completely randomly.

Pair Corralation between Travelzoo and Impact Fusion

Given the investment horizon of 90 days Travelzoo is expected to under-perform the Impact Fusion. But the stock apears to be less risky and, when comparing its historical volatility, Travelzoo is 2.01 times less risky than Impact Fusion. The stock trades about -0.11 of its potential returns per unit of risk. The Impact Fusion International is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  4.50  in Impact Fusion International on December 29, 2024 and sell it today you would earn a total of  4.99  from holding Impact Fusion International or generate 110.89% return on investment over 90 days.

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

Travelzoo  vs.  Impact Fusion International

Travelzoo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Travelzoo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Impact Fusion Intern

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Impact Fusion International are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Impact Fusion unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Travelzoo and Impact Fusion

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

The idea behind Travelzoo and Impact Fusion International 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.