Correlation Between TRAVEL + and MONEYSUPERMARKET

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

By analyzing existing cross correlation between TRAVEL LEISURE DL 01 and MONEYSUPERMARKET, you can compare the effects of market volatilities on TRAVEL + and MONEYSUPERMARKET 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 TRAVEL + with a short position of MONEYSUPERMARKET. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL + and MONEYSUPERMARKET.

Diversification Opportunities for TRAVEL + and MONEYSUPERMARKET

-0.44

Correlation Coefficient

TRAVEL +  MONEYSUPERMARKET

Very good diversification

The 3 months correlation between TRAVEL and MONEYSUPERMARKET is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and MONEYSUPERMARKET in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MONEYSUPERMARKET and TRAVEL + 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 TRAVEL LEISURE DL 01 are associated (or correlated) with MONEYSUPERMARKET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MONEYSUPERMARKET has no effect on the direction of TRAVEL + i.e., TRAVEL + and MONEYSUPERMARKET go up and down completely randomly.

Pair Corralation between TRAVEL + and MONEYSUPERMARKET

Assuming the 90 days trading horizon TRAVEL LEISURE DL 01 is expected to generate 1.07 times more return on investment than MONEYSUPERMARKET. However, TRAVEL + is 1.07 times more volatile than MONEYSUPERMARKET. It trades about -0.17 of its potential returns per unit of risk. MONEYSUPERMARKET is currently generating about -0.44 per unit of risk. If you would invest  5,050  in TRAVEL LEISURE DL 01 on October 11, 2024 and sell it today you would lose (190.00) from holding TRAVEL LEISURE DL 01 or give up 3.76% of portfolio value over 90 days.

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

TRAVEL LEISURE DL 01  vs.  MONEYSUPERMARKET

TRAVEL LEISURE DL

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRAVEL + reported solid returns over the last few months and may actually be approaching a breakup point.

MONEYSUPERMARKET

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MONEYSUPERMARKET has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with TRAVEL + and MONEYSUPERMARKET

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

The idea behind TRAVEL LEISURE DL 01 and MONEYSUPERMARKET 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.