Correlation Between TUI AG and TRAVEL LEISURE

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

By analyzing existing cross correlation between TUI AG and TRAVEL LEISURE DL 01, you can compare the effects of market volatilities on TUI AG and TRAVEL LEISURE 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 TUI AG with a short position of TRAVEL LEISURE. Check out your portfolio center. Please also check ongoing floating volatility patterns of TUI AG and TRAVEL LEISURE.

Diversification Opportunities for TUI AG and TRAVEL LEISURE

0.68

Correlation Coefficient

TUI AG  TRAVEL LEISURE

Poor diversification

The 3 months correlation between TUI and TRAVEL is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding TUI AG and TRAVEL LEISURE DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVEL LEISURE DL and TUI AG 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 TUI AG are associated (or correlated) with TRAVEL LEISURE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVEL LEISURE DL has no effect on the direction of TUI AG i.e., TUI AG and TRAVEL LEISURE go up and down completely randomly.

Pair Corralation between TUI AG and TRAVEL LEISURE

Assuming the 90 days trading horizon TUI AG is expected to generate 1.69 times less return on investment than TRAVEL LEISURE. In addition to that, TUI AG is 1.59 times more volatile than TRAVEL LEISURE DL 01. It trades about 0.09 of its total potential returns per unit of risk. TRAVEL LEISURE DL 01 is currently generating about 0.24 per unit of volatility. If you would invest  3,955  in TRAVEL LEISURE DL 01 on May 1, 2025 and sell it today you would earn a total of  1,245  from holding TRAVEL LEISURE DL 01 or generate 31.48% return on investment over 90 days.

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

TUI AG  vs.  TRAVEL LEISURE DL 01

TUI AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TUI AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, TUI AG exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, TRAVEL LEISURE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TUI AG and TRAVEL LEISURE

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

The idea behind TUI AG and TRAVEL LEISURE DL 01 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.