Correlation Between Entravision Communications and TripAdvisor

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

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

Diversification Opportunities for Entravision Communications and TripAdvisor

0.61

Correlation Coefficient

Entravision Communications  TripAdvisor

Poor diversification

The 3 months correlation between Entravision and TripAdvisor is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and TripAdvisor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TripAdvisor and Entravision Communications 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 Entravision Communications 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 Entravision Communications i.e., Entravision Communications and TripAdvisor go up and down completely randomly.

Pair Corralation between Entravision Communications and TripAdvisor

Considering the 90-day investment horizon Entravision Communications is expected to generate 1.16 times less return on investment than TripAdvisor. But when comparing it to its historical volatility, Entravision Communications is 1.12 times less risky than TripAdvisor. It trades about 0.15 of its potential returns per unit of risk. TripAdvisor is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,269  in TripAdvisor on May 1, 2025 and sell it today you would earn a total of  487.00  from holding TripAdvisor or generate 38.38% return on investment over 90 days.

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

Entravision Communications  vs.  TripAdvisor

Entravision Communications

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Entravision Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.

TripAdvisor

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TripAdvisor are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward indicators, TripAdvisor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Entravision Communications and TripAdvisor

The main advantage of trading using opposite Entravision Communications and TripAdvisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entravision Communications 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 Entravision Communications 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.