Correlation Between Booking Holdings and TUI AG
Can any of the company-specific risk be diversified away by investing in both Booking Holdings and TUI AG 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 TUI AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Booking Holdings and TUI AG, you can compare the effects of market volatilities on Booking Holdings and TUI AG 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 TUI AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booking Holdings and TUI AG.
Diversification Opportunities for Booking Holdings and TUI AG
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Booking and TUI is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Booking Holdings and TUI AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TUI AG 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 TUI AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TUI AG has no effect on the direction of Booking Holdings i.e., Booking Holdings and TUI AG go up and down completely randomly.
Pair Corralation between Booking Holdings and TUI AG
Given the investment horizon of 90 days Booking Holdings is expected to generate 0.64 times more return on investment than TUI AG. However, Booking Holdings is 1.56 times less risky than TUI AG. It trades about 0.44 of its potential returns per unit of risk. TUI AG is currently generating about -0.05 per unit of risk. If you would invest 446,393 in Booking Holdings on August 31, 2024 and sell it today you would earn a total of 75,922 from holding Booking Holdings or generate 17.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Booking Holdings vs. TUI AG
Performance |
| Timeline |
| Booking Holdings |
| TUI AG |
Booking Holdings and TUI AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Booking Holdings and TUI AG
The main advantage of trading using opposite Booking Holdings and TUI AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Booking Holdings position performs unexpectedly, TUI AG 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 TUI AG will offset losses from the drop in TUI AG's long position.| Booking Holdings vs. TripAdvisor | Booking Holdings vs. Airbnb Inc | Booking Holdings vs. Royal Caribbean Cruises | Booking Holdings vs. Norwegian Cruise Line |
| TUI AG vs. Expedia Group | TUI AG vs. Trip Group Ltd | TUI AG vs. Booking Holdings | TUI AG vs. Despegar Corp |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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