Correlation Between TRAVEL + and TRAINLINE PLC

Can any of the company-specific risk be diversified away by investing in both TRAVEL + and TRAINLINE PLC 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 TRAINLINE PLC 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 TRAINLINE PLC LS, you can compare the effects of market volatilities on TRAVEL + and TRAINLINE PLC 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 TRAINLINE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL + and TRAINLINE PLC.

Diversification Opportunities for TRAVEL + and TRAINLINE PLC

-0.43

Correlation Coefficient

TRAVEL +  TRAINLINE PLC

Very good diversification

The 3 months correlation between TRAVEL and TRAINLINE is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and TRAINLINE PLC LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAINLINE PLC LS 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 TRAINLINE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAINLINE PLC LS has no effect on the direction of TRAVEL + i.e., TRAVEL + and TRAINLINE PLC go up and down completely randomly.

Pair Corralation between TRAVEL + and TRAINLINE PLC

Assuming the 90 days trading horizon TRAVEL LEISURE DL 01 is expected to generate 0.67 times more return on investment than TRAINLINE PLC. However, TRAVEL LEISURE DL 01 is 1.5 times less risky than TRAINLINE PLC. It trades about 0.28 of its potential returns per unit of risk. TRAINLINE PLC LS is currently generating about -0.01 per unit of risk. If you would invest  3,500  in TRAVEL LEISURE DL 01 on April 22, 2025 and sell it today you would earn a total of  1,360  from holding TRAVEL LEISURE DL 01 or generate 38.86% return on investment over 90 days.

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

TRAVEL LEISURE DL 01  vs.  TRAINLINE PLC LS

TRAVEL LEISURE DL

Risk-Adjusted Performance

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 uncertain basic indicators, TRAVEL + reported solid returns over the last few months and may actually be approaching a breakup point.

TRAINLINE PLC LS

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRAINLINE PLC LS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TRAINLINE PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TRAVEL + and TRAINLINE PLC

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

The idea behind TRAVEL LEISURE DL 01 and TRAINLINE PLC LS 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.