Correlation Between TRAVEL + and VIAPLAY GROUP

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

Diversification Opportunities for TRAVEL + and VIAPLAY GROUP

-0.7

Correlation Coefficient

TRAVEL +  VIAPLAY GROUP

Excellent diversification

The 3 months correlation between TRAVEL and VIAPLAY is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and VIAPLAY GROUP AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIAPLAY GROUP AB and TRAVEL + 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 VIAPLAY GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIAPLAY GROUP AB has no effect on the direction of TRAVEL + i.e., TRAVEL + and VIAPLAY GROUP go up and down completely randomly.

Pair Corralation between TRAVEL + and VIAPLAY GROUP

Assuming the 90 days trading horizon TRAVEL LEISURE DL 01 is expected to generate 0.37 times more return on investment than VIAPLAY GROUP. However, TRAVEL LEISURE DL 01 is 2.71 times less risky than VIAPLAY GROUP. It trades about 0.28 of its potential returns per unit of risk. VIAPLAY GROUP AB is currently generating about -0.05 per unit of risk. If you would invest  3,927  in TRAVEL LEISURE DL 01 on September 1, 2024 and sell it today you would earn a total of  1,323  from holding TRAVEL LEISURE DL 01 or generate 33.69% return on investment over 90 days.

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

TRAVEL LEISURE DL 01  vs.  VIAPLAY GROUP AB

TRAVEL LEISURE DL

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRAVEL + reported solid returns over the last few months and may actually be approaching a breakup point.

VIAPLAY GROUP AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VIAPLAY GROUP AB 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.

Pair Trading with TRAVEL + and VIAPLAY GROUP

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

The idea behind TRAVEL LEISURE DL 01 and VIAPLAY GROUP AB 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.