Correlation Between METALL ZUG and Travel Leisure

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

By analyzing existing cross correlation between METALL ZUG AG and Travel Leisure Co, you can compare the effects of market volatilities on METALL ZUG and Travel Leisure 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 METALL ZUG with a short position of Travel Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of METALL ZUG and Travel Leisure.

Diversification Opportunities for METALL ZUG and Travel Leisure

-0.6

Correlation Coefficient

METALL ZUG  Travel Leisure

Excellent diversification

The 3 months correlation between METALL and Travel is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding METALL ZUG AG and Travel Leisure Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travel Leisure and METALL ZUG 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 METALL ZUG AG are associated (or correlated) with Travel Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Travel Leisure has no effect on the direction of METALL ZUG i.e., METALL ZUG and Travel Leisure go up and down completely randomly.

Pair Corralation between METALL ZUG and Travel Leisure

Assuming the 90 days trading horizon METALL ZUG AG is expected to under-perform the Travel Leisure. But the stock apears to be less risky and, when comparing its historical volatility, METALL ZUG AG is 3.92 times less risky than Travel Leisure. The stock trades about -0.08 of its potential returns per unit of risk. The Travel Leisure Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5,765  in Travel Leisure Co on September 19, 2024 and sell it today you would earn a total of  50.00  from holding Travel Leisure Co or generate 0.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.91%
Values	Daily Returns

METALL ZUG AG  vs.  Travel Leisure Co

METALL ZUG AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days METALL ZUG AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, METALL ZUG is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Travel Leisure

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Travel Leisure Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Travel Leisure unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with METALL ZUG and Travel Leisure

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

The idea behind METALL ZUG AG and Travel Leisure Co 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.