Correlation Between TRAVEL + and SHIP HEALTHCARE

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

Diversification Opportunities for TRAVEL + and SHIP HEALTHCARE

-0.4

Correlation Coefficient

TRAVEL +  SHIP HEALTHCARE

Very good diversification

The 3 months correlation between TRAVEL and SHIP is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and SHIP HEALTHCARE HLDGINC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIP HEALTHCARE HLDGINC 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 SHIP HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIP HEALTHCARE HLDGINC has no effect on the direction of TRAVEL + i.e., TRAVEL + and SHIP HEALTHCARE go up and down completely randomly.

Pair Corralation between TRAVEL + and SHIP HEALTHCARE

Assuming the 90 days trading horizon TRAVEL LEISURE DL 01 is expected to generate 0.91 times more return on investment than SHIP HEALTHCARE. However, TRAVEL LEISURE DL 01 is 1.1 times less risky than SHIP HEALTHCARE. It trades about 0.28 of its potential returns per unit of risk. SHIP HEALTHCARE HLDGINC is currently generating about -0.06 per unit of risk. If you would invest  3,500  in TRAVEL LEISURE DL 01 on April 21, 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.  SHIP HEALTHCARE HLDGINC

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

SHIP HEALTHCARE HLDGINC

Risk-Adjusted Performance

Very Weak

Over the last 90 days SHIP HEALTHCARE HLDGINC 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 SHIP HEALTHCARE

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

The idea behind TRAVEL LEISURE DL 01 and SHIP HEALTHCARE HLDGINC 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .