Correlation Between TRAVEL + and Lindblad Expeditions

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

Diversification Opportunities for TRAVEL + and Lindblad Expeditions

0.78

Correlation Coefficient

TRAVEL +  Lindblad Expeditions

Poor diversification

The 3 months correlation between TRAVEL and Lindblad is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and Lindblad Expeditions Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindblad Expeditions 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 Lindblad Expeditions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindblad Expeditions has no effect on the direction of TRAVEL + i.e., TRAVEL + and Lindblad Expeditions go up and down completely randomly.

Pair Corralation between TRAVEL + and Lindblad Expeditions

Assuming the 90 days trading horizon TRAVEL LEISURE DL 01 is expected to generate 0.61 times more return on investment than Lindblad Expeditions. However, TRAVEL LEISURE DL 01 is 1.64 times less risky than Lindblad Expeditions. It trades about -0.06 of its potential returns per unit of risk. Lindblad Expeditions Holdings is currently generating about -0.08 per unit of risk. If you would invest  4,762  in TRAVEL LEISURE DL 01 on December 30, 2024 and sell it today you would lose (402.00) from holding TRAVEL LEISURE DL 01 or give up 8.44% 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.  Lindblad Expeditions Holdings

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.

Lindblad Expeditions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lindblad Expeditions Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with TRAVEL + and Lindblad Expeditions

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

The idea behind TRAVEL LEISURE DL 01 and Lindblad Expeditions Holdings 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.