Correlation Between Hour Loop and TripAdvisor

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

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

Diversification Opportunities for Hour Loop and TripAdvisor

-0.4

Correlation Coefficient

Hour Loop  TripAdvisor

Very good diversification

The 3 months correlation between Hour and TripAdvisor is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hour Loop and TripAdvisor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TripAdvisor and Hour Loop 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 Hour Loop are associated (or correlated) with TripAdvisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TripAdvisor has no effect on the direction of Hour Loop i.e., Hour Loop and TripAdvisor go up and down completely randomly.

Pair Corralation between Hour Loop and TripAdvisor

Given the investment horizon of 90 days Hour Loop is expected to under-perform the TripAdvisor. In addition to that, Hour Loop is 1.72 times more volatile than TripAdvisor. It trades about -0.02 of its total potential returns per unit of risk. TripAdvisor is currently generating about -0.01 per unit of volatility. If you would invest  1,421  in TripAdvisor on September 24, 2024 and sell it today you would lose (15.00) from holding TripAdvisor or give up 1.06% of portfolio value over 90 days.

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

Hour Loop  vs.  TripAdvisor

Hour Loop

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hour Loop are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Hour Loop may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TripAdvisor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TripAdvisor has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, TripAdvisor is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Hour Loop and TripAdvisor

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

The idea behind Hour Loop and TripAdvisor 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.