Correlation Between TripAdvisor and Wynn Resorts

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Can any of the company-specific risk be diversified away by investing in both TripAdvisor and Wynn Resorts 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 TripAdvisor and Wynn Resorts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TripAdvisor and Wynn Resorts Limited, you can compare the effects of market volatilities on TripAdvisor and Wynn Resorts 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 TripAdvisor with a short position of Wynn Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of TripAdvisor and Wynn Resorts.

Diversification Opportunities for TripAdvisor and Wynn Resorts

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between TripAdvisor and Wynn is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding TripAdvisor and Wynn Resorts Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wynn Resorts Limited and TripAdvisor 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 TripAdvisor are associated (or correlated) with Wynn Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wynn Resorts Limited has no effect on the direction of TripAdvisor i.e., TripAdvisor and Wynn Resorts go up and down completely randomly.

Pair Corralation between TripAdvisor and Wynn Resorts

Given the investment horizon of 90 days TripAdvisor is expected to generate 1.75 times less return on investment than Wynn Resorts. In addition to that, TripAdvisor is 1.17 times more volatile than Wynn Resorts Limited. It trades about 0.02 of its total potential returns per unit of risk. Wynn Resorts Limited is currently generating about 0.05 per unit of volatility. If you would invest  6,678  in Wynn Resorts Limited on December 29, 2023 and sell it today you would earn a total of  3,501  from holding Wynn Resorts Limited or generate 52.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

TripAdvisor  vs.  Wynn Resorts Limited

 Performance 
       Timeline  
TripAdvisor 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
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 abnormal forward indicators, TripAdvisor reported solid returns over the last few months and may actually be approaching a breakup point.
Wynn Resorts Limited 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Wynn Resorts Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Wynn Resorts displayed solid returns over the last few months and may actually be approaching a breakup point.

TripAdvisor and Wynn Resorts Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with TripAdvisor and Wynn Resorts

The main advantage of trading using opposite TripAdvisor and Wynn Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TripAdvisor position performs unexpectedly, Wynn Resorts 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 Wynn Resorts will offset losses from the drop in Wynn Resorts' long position.
The idea behind TripAdvisor and Wynn Resorts Limited 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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