Correlation Between Emerald Expositions and Travelzoo

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

By analyzing existing cross correlation between Emerald Expositions Events and Travelzoo, you can compare the effects of market volatilities on Emerald Expositions and Travelzoo 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 Emerald Expositions with a short position of Travelzoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerald Expositions and Travelzoo.

Diversification Opportunities for Emerald Expositions and Travelzoo

-0.12

Correlation Coefficient

Emerald Expositions  Travelzoo

Good diversification

The 3 months correlation between Emerald and Travelzoo is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Emerald Expositions Events and Travelzoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travelzoo and Emerald Expositions 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 Emerald Expositions Events are associated (or correlated) with Travelzoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Travelzoo has no effect on the direction of Emerald Expositions i.e., Emerald Expositions and Travelzoo go up and down completely randomly.

Pair Corralation between Emerald Expositions and Travelzoo

Considering the 90-day investment horizon Emerald Expositions Events is expected to under-perform the Travelzoo. In addition to that, Emerald Expositions is 1.2 times more volatile than Travelzoo. It trades about -0.01 of its total potential returns per unit of risk. Travelzoo is currently generating about 0.25 per unit of volatility. If you would invest  1,099  in Travelzoo on September 2, 2024 and sell it today you would earn a total of  897.00  from holding Travelzoo or generate 81.62% return on investment over 90 days.

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

Emerald Expositions Events  vs.  Travelzoo

Emerald Expositions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerald Expositions Events has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Emerald Expositions is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Travelzoo

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Travelzoo are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Travelzoo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Emerald Expositions and Travelzoo

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

The idea behind Emerald Expositions Events and Travelzoo 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.