Correlation Between Grupo Televisa and TripAdvisor

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

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

Diversification Opportunities for Grupo Televisa and TripAdvisor

0.64

Correlation Coefficient

Grupo Televisa  TripAdvisor

Poor diversification

The 3 months correlation between Grupo and TripAdvisor is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Televisa SAB and TripAdvisor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TripAdvisor and Grupo Televisa 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 Grupo Televisa SAB 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 Grupo Televisa i.e., Grupo Televisa and TripAdvisor go up and down completely randomly.

Pair Corralation between Grupo Televisa and TripAdvisor

Allowing for the 90-day total investment horizon Grupo Televisa SAB is expected to under-perform the TripAdvisor. In addition to that, Grupo Televisa is 1.22 times more volatile than TripAdvisor. It trades about -0.08 of its total potential returns per unit of risk. TripAdvisor is currently generating about -0.05 per unit of volatility. If you would invest  1,802  in TripAdvisor on September 2, 2024 and sell it today you would lose (369.00) from holding TripAdvisor or give up 20.48% of portfolio value over 90 days.

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

Grupo Televisa SAB  vs.  TripAdvisor

Grupo Televisa SAB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Televisa SAB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Grupo Televisa showed solid returns over the last few months and may actually be approaching a breakup point.

TripAdvisor

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TripAdvisor are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, TripAdvisor is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Grupo Televisa and TripAdvisor

The main advantage of trading using opposite Grupo Televisa and TripAdvisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Televisa 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 Grupo Televisa SAB 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.