Correlation Between Carnival and Amadeus IT
Can any of the company-specific risk be diversified away by investing in both Carnival and Amadeus IT 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 Carnival and Amadeus IT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carnival and Amadeus IT Holding, you can compare the effects of market volatilities on Carnival and Amadeus IT 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 Carnival with a short position of Amadeus IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival and Amadeus IT.
Diversification Opportunities for Carnival and Amadeus IT
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Carnival and Amadeus is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Carnival and Amadeus IT Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amadeus IT Holding and Carnival 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 Carnival are associated (or correlated) with Amadeus IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amadeus IT Holding has no effect on the direction of Carnival i.e., Carnival and Amadeus IT go up and down completely randomly.
Pair Corralation between Carnival and Amadeus IT
Considering the 90-day investment horizon Carnival is expected to generate 1.8 times more return on investment than Amadeus IT. However, Carnival is 1.8 times more volatile than Amadeus IT Holding. It trades about 0.33 of its potential returns per unit of risk. Amadeus IT Holding is currently generating about -0.24 per unit of risk. If you would invest 2,192 in Carnival on August 27, 2024 and sell it today you would earn a total of 327.00 from holding Carnival or generate 14.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carnival vs. Amadeus IT Holding
Performance |
| Timeline |
| Carnival |
| Amadeus IT Holding |
Carnival and Amadeus IT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carnival and Amadeus IT
The main advantage of trading using opposite Carnival and Amadeus IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnival position performs unexpectedly, Amadeus IT 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 Amadeus IT will offset losses from the drop in Amadeus IT's long position.| Carnival vs. Royal Caribbean Cruises | Carnival vs. Airbnb Inc | Carnival vs. Expedia Group | Carnival vs. Booking Holdings |
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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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