Correlation Between TRAVEL + and GEAR4MUSIC (HLDGS)

Can any of the company-specific risk be diversified away by investing in both TRAVEL + and GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC LS 10, you can compare the effects of market volatilities on TRAVEL + and GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC (HLDGS). Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL + and GEAR4MUSIC (HLDGS).

Diversification Opportunities for TRAVEL + and GEAR4MUSIC (HLDGS)

0.12

Correlation Coefficient

TRAVEL +  GEAR4MUSIC (HLDGS)

Average diversification

The 3 months correlation between TRAVEL and GEAR4MUSIC is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and GEAR4MUSIC LS 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC (HLDGS). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEAR4MUSIC (HLDGS) has no effect on the direction of TRAVEL + i.e., TRAVEL + and GEAR4MUSIC (HLDGS) go up and down completely randomly.

Pair Corralation between TRAVEL + and GEAR4MUSIC (HLDGS)

Assuming the 90 days trading horizon TRAVEL + is expected to generate 2.09 times less return on investment than GEAR4MUSIC (HLDGS). But when comparing it to its historical volatility, TRAVEL LEISURE DL 01 is 1.2 times less risky than GEAR4MUSIC (HLDGS). It trades about 0.08 of its potential returns per unit of risk. GEAR4MUSIC LS 10 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  248.00  in GEAR4MUSIC LS 10 on July 26, 2025 and sell it today you would earn a total of  78.00  from holding GEAR4MUSIC LS 10 or generate 31.45% return on investment over 90 days.

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

TRAVEL LEISURE DL 01  vs.  GEAR4MUSIC LS 10

TRAVEL LEISURE DL

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 6 (%) 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.

GEAR4MUSIC (HLDGS)

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GEAR4MUSIC LS 10 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, GEAR4MUSIC (HLDGS) reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TRAVEL + and GEAR4MUSIC (HLDGS)

The main advantage of trading using opposite TRAVEL + and GEAR4MUSIC (HLDGS) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAVEL + position performs unexpectedly, GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC (HLDGS) will offset losses from the drop in GEAR4MUSIC (HLDGS)'s long position.

The idea behind TRAVEL LEISURE DL 01 and GEAR4MUSIC LS 10 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.