Correlation Between TRAVEL + and Insulet

Can any of the company-specific risk be diversified away by investing in both TRAVEL + and Insulet 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 Insulet 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 Insulet, you can compare the effects of market volatilities on TRAVEL + and Insulet 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 Insulet. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL + and Insulet.

Diversification Opportunities for TRAVEL + and Insulet

0.71

Correlation Coefficient

TRAVEL +  Insulet

Poor diversification

The 3 months correlation between TRAVEL and Insulet is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and Insulet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insulet 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 Insulet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insulet has no effect on the direction of TRAVEL + i.e., TRAVEL + and Insulet go up and down completely randomly.

Pair Corralation between TRAVEL + and Insulet

Assuming the 90 days trading horizon TRAVEL LEISURE DL 01 is expected to under-perform the Insulet. But the stock apears to be less risky and, when comparing its historical volatility, TRAVEL LEISURE DL 01 is 1.07 times less risky than Insulet. The stock trades about -0.06 of its potential returns per unit of risk. The Insulet is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  25,090  in Insulet on December 30, 2024 and sell it today you would lose (1,430) from holding Insulet or give up 5.7% of portfolio value over 90 days.

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

TRAVEL LEISURE DL 01  vs.  Insulet

TRAVEL LEISURE DL

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRAVEL LEISURE DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Insulet

Risk-Adjusted Performance

Very Weak

Over the last 90 days Insulet has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Insulet is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TRAVEL + and Insulet

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

The idea behind TRAVEL LEISURE DL 01 and Insulet 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.