Correlation Between TRAVEL LEISURE and Gold Road

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

Diversification Opportunities for TRAVEL LEISURE and Gold Road

0.11

Correlation Coefficient

TRAVEL LEISURE  Gold Road

Average diversification

The 3 months correlation between TRAVEL and Gold is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources and TRAVEL LEISURE 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 Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of TRAVEL LEISURE i.e., TRAVEL LEISURE and Gold Road go up and down completely randomly.

Pair Corralation between TRAVEL LEISURE and Gold Road

Assuming the 90 days trading horizon TRAVEL LEISURE is expected to generate 4.27 times less return on investment than Gold Road. But when comparing it to its historical volatility, TRAVEL LEISURE DL 01 is 1.23 times less risky than Gold Road. It trades about 0.05 of its potential returns per unit of risk. Gold Road Resources is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  154.00  in Gold Road Resources on July 18, 2025 and sell it today you would earn a total of  35.00  from holding Gold Road Resources or generate 22.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	87.5%
Values	Daily Returns

TRAVEL LEISURE DL 01  vs.  Gold Road Resources

TRAVEL LEISURE DL

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, TRAVEL LEISURE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Gold Road Resources

Risk-Adjusted Performance

Good

Over the last 90 days Gold Road Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Gold Road reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TRAVEL LEISURE and Gold Road

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

The idea behind TRAVEL LEISURE DL 01 and Gold Road Resources 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.