Correlation Between Booking Holdings and Flight Centre
Can any of the company-specific risk be diversified away by investing in both Booking Holdings and Flight Centre 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 Flight Centre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Booking Holdings and Flight Centre Travel, you can compare the effects of market volatilities on Booking Holdings and Flight Centre 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 Flight Centre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booking Holdings and Flight Centre.
Diversification Opportunities for Booking Holdings and Flight Centre
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Booking and Flight is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Booking Holdings and Flight Centre Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flight Centre Travel 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 Flight Centre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flight Centre Travel has no effect on the direction of Booking Holdings i.e., Booking Holdings and Flight Centre go up and down completely randomly.
Pair Corralation between Booking Holdings and Flight Centre
Given the investment horizon of 90 days Booking Holdings is expected to generate 1.45 times more return on investment than Flight Centre. However, Booking Holdings is 1.45 times more volatile than Flight Centre Travel. It trades about 0.13 of its potential returns per unit of risk. Flight Centre Travel is currently generating about 0.08 per unit of risk. If you would invest 200,555 in Booking Holdings on August 30, 2024 and sell it today you would earn a total of 321,760 from holding Booking Holdings or generate 160.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 87.27% |
| Values | Daily Returns |
Booking Holdings vs. Flight Centre Travel
Performance |
| Timeline |
| Booking Holdings |
| Flight Centre Travel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Booking Holdings and Flight Centre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Booking Holdings and Flight Centre
The main advantage of trading using opposite Booking Holdings and Flight Centre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Booking Holdings position performs unexpectedly, Flight Centre 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 Flight Centre will offset losses from the drop in Flight Centre's long position.| Booking Holdings vs. TripAdvisor | Booking Holdings vs. Airbnb Inc | Booking Holdings vs. Royal Caribbean Cruises | Booking Holdings vs. Norwegian Cruise Line |
| Flight Centre vs. Norwegian Cruise Line | Flight Centre vs. Carnival | Flight Centre vs. Airbnb Inc | Flight Centre vs. Expedia Group |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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