Correlation Between Booking Holdings and Airbnb
Can any of the company-specific risk be diversified away by investing in both Booking Holdings and Airbnb 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 Booking Holdings and Airbnb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Booking Holdings and Airbnb Inc, you can compare the effects of market volatilities on Booking Holdings and Airbnb 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 Booking Holdings with a short position of Airbnb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booking Holdings and Airbnb.
Diversification Opportunities for Booking Holdings and Airbnb
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Booking and Airbnb is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Booking Holdings and Airbnb Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbnb Inc and Booking Holdings 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 Booking Holdings are associated (or correlated) with Airbnb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbnb Inc has no effect on the direction of Booking Holdings i.e., Booking Holdings and Airbnb go up and down completely randomly.
Pair Corralation between Booking Holdings and Airbnb
Given the investment horizon of 90 days Booking Holdings is expected to generate 0.76 times more return on investment than Airbnb. However, Booking Holdings is 1.32 times less risky than Airbnb. It trades about 0.11 of its potential returns per unit of risk. Airbnb Inc is currently generating about 0.03 per unit of risk. If you would invest 276,504 in Booking Holdings on October 25, 2024 and sell it today you would earn a total of 188,749 from holding Booking Holdings or generate 68.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Booking Holdings vs. Airbnb Inc
Performance |
| Timeline |
| Booking Holdings |
| Airbnb Inc |
Booking Holdings and Airbnb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Booking Holdings and Airbnb
The main advantage of trading using opposite Booking Holdings and Airbnb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Booking Holdings position performs unexpectedly, Airbnb 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 Airbnb will offset losses from the drop in Airbnb's long position.| Booking Holdings vs. TripAdvisor | Booking Holdings vs. Airbnb Inc | Booking Holdings vs. Royal Caribbean Cruises | Booking Holdings vs. Norwegian Cruise Line |
| Airbnb vs. Norwegian Cruise Line | Airbnb vs. Royal Caribbean Cruises | Airbnb vs. Expedia Group | Airbnb 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 CEOs Directory module to screen CEOs from public companies around the world.
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