Correlation Between Airbnb and Norwegian Cruise
Can any of the company-specific risk be diversified away by investing in both Airbnb and Norwegian Cruise 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 Airbnb and Norwegian Cruise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airbnb Inc and Norwegian Cruise Line, you can compare the effects of market volatilities on Airbnb and Norwegian Cruise 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 Airbnb with a short position of Norwegian Cruise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airbnb and Norwegian Cruise.
Diversification Opportunities for Airbnb and Norwegian Cruise
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Airbnb and Norwegian is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Airbnb Inc and Norwegian Cruise Line in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwegian Cruise Line and Airbnb 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 Airbnb Inc are associated (or correlated) with Norwegian Cruise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norwegian Cruise Line has no effect on the direction of Airbnb i.e., Airbnb and Norwegian Cruise go up and down completely randomly.
Pair Corralation between Airbnb and Norwegian Cruise
Given the investment horizon of 90 days Airbnb is expected to generate 6.75 times less return on investment than Norwegian Cruise. In addition to that, Airbnb is 1.06 times more volatile than Norwegian Cruise Line. It trades about 0.03 of its total potential returns per unit of risk. Norwegian Cruise Line is currently generating about 0.24 per unit of volatility. If you would invest 2,380 in Norwegian Cruise Line on August 27, 2024 and sell it today you would earn a total of 306.00 from holding Norwegian Cruise Line or generate 12.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airbnb Inc vs. Norwegian Cruise Line
Performance |
| Timeline |
| Airbnb Inc |
| Norwegian Cruise Line |
Airbnb and Norwegian Cruise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airbnb and Norwegian Cruise
The main advantage of trading using opposite Airbnb and Norwegian Cruise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airbnb position performs unexpectedly, Norwegian Cruise 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 Norwegian Cruise will offset losses from the drop in Norwegian Cruise's long position.| Airbnb vs. Norwegian Cruise Line | Airbnb vs. Royal Caribbean Cruises | Airbnb vs. Expedia Group | Airbnb vs. Booking Holdings |
| Norwegian Cruise vs. Carnival | Norwegian Cruise vs. Airbnb Inc | Norwegian Cruise vs. Expedia Group | Norwegian Cruise vs. Booking Holdings |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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