Correlation Between TRAVEL LEISURE and Whitehaven Coal

Can any of the company-specific risk be diversified away by investing in both TRAVEL LEISURE and Whitehaven Coal 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 LEISURE and Whitehaven Coal 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 Whitehaven Coal Limited, you can compare the effects of market volatilities on TRAVEL LEISURE and Whitehaven Coal 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 LEISURE with a short position of Whitehaven Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL LEISURE and Whitehaven Coal.

Diversification Opportunities for TRAVEL LEISURE and Whitehaven Coal

0.19

Correlation Coefficient

TRAVEL LEISURE  Whitehaven Coal

Average diversification

The 3 months correlation between TRAVEL and Whitehaven is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and Whitehaven Coal Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitehaven Coal and TRAVEL LEISURE 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 Whitehaven Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitehaven Coal has no effect on the direction of TRAVEL LEISURE i.e., TRAVEL LEISURE and Whitehaven Coal go up and down completely randomly.

Pair Corralation between TRAVEL LEISURE and Whitehaven Coal

Assuming the 90 days trading horizon TRAVEL LEISURE DL 01 is expected to under-perform the Whitehaven Coal. But the stock apears to be less risky and, when comparing its historical volatility, TRAVEL LEISURE DL 01 is 1.21 times less risky than Whitehaven Coal. The stock trades about -0.09 of its potential returns per unit of risk. The Whitehaven Coal Limited is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  354.00  in Whitehaven Coal Limited on December 22, 2024 and sell it today you would lose (32.00) from holding Whitehaven Coal Limited or give up 9.04% of portfolio value over 90 days.

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

TRAVEL LEISURE DL 01  vs.  Whitehaven Coal Limited

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.

Whitehaven Coal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Whitehaven Coal Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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.

Pair Trading with TRAVEL LEISURE and Whitehaven Coal

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

The idea behind TRAVEL LEISURE DL 01 and Whitehaven Coal Limited 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..