Correlation Between Booking Holdings and Expedia
Can any of the company-specific risk be diversified away by investing in both Booking Holdings and Expedia 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 Expedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Booking Holdings and Expedia Group, you can compare the effects of market volatilities on Booking Holdings and Expedia 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 Expedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booking Holdings and Expedia.
Diversification Opportunities for Booking Holdings and Expedia
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Booking and Expedia is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Booking Holdings and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia Group 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 Expedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expedia Group has no effect on the direction of Booking Holdings i.e., Booking Holdings and Expedia go up and down completely randomly.
Pair Corralation between Booking Holdings and Expedia
Given the investment horizon of 90 days Booking Holdings is expected to generate 5.68 times less return on investment than Expedia. But when comparing it to its historical volatility, Booking Holdings is 1.03 times less risky than Expedia. It trades about 0.02 of its potential returns per unit of risk. Expedia Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 15,940 in Expedia Group on November 1, 2024 and sell it today you would earn a total of 1,255 from holding Expedia Group or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Booking Holdings vs. Expedia Group
Performance |
| Timeline |
| Booking Holdings |
| Expedia Group |
Booking Holdings and Expedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Booking Holdings and Expedia
The main advantage of trading using opposite Booking Holdings and Expedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Booking Holdings position performs unexpectedly, Expedia 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 Expedia will offset losses from the drop in Expedia's long position.| Booking Holdings vs. TripAdvisor | Booking Holdings vs. Airbnb Inc | Booking Holdings vs. Royal Caribbean Cruises | Booking Holdings vs. Norwegian Cruise Line |
| Expedia vs. Airbnb Inc | Expedia vs. TripAdvisor | Expedia vs. Royal Caribbean Cruises | Expedia vs. Norwegian Cruise Line |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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