Correlation Between Carnival and Booking Holdings
Can any of the company-specific risk be diversified away by investing in both Carnival and Booking Holdings 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 Booking Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carnival and Booking Holdings, you can compare the effects of market volatilities on Carnival and Booking Holdings 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 Booking Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival and Booking Holdings.
Diversification Opportunities for Carnival and Booking Holdings
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Carnival and Booking is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Carnival and Booking Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booking Holdings 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 Booking Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booking Holdings has no effect on the direction of Carnival i.e., Carnival and Booking Holdings go up and down completely randomly.
Pair Corralation between Carnival and Booking Holdings
Considering the 90-day investment horizon Carnival is expected to generate 1.71 times more return on investment than Booking Holdings. However, Carnival is 1.71 times more volatile than Booking Holdings. It trades about 0.15 of its potential returns per unit of risk. Booking Holdings is currently generating about 0.17 per unit of risk. If you would invest 1,565 in Carnival on August 24, 2024 and sell it today you would earn a total of 970.00 from holding Carnival or generate 61.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carnival vs. Booking Holdings
Performance |
| Timeline |
| Carnival |
| Booking Holdings |
Carnival and Booking Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carnival and Booking Holdings
The main advantage of trading using opposite Carnival and Booking Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnival position performs unexpectedly, Booking Holdings 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 Booking Holdings will offset losses from the drop in Booking Holdings' long position.| Carnival vs. Royal Caribbean Cruises | Carnival vs. Airbnb Inc | Carnival vs. Expedia Group | Carnival vs. Booking Holdings |
| Booking Holdings vs. TripAdvisor | Booking Holdings vs. Airbnb Inc | Booking Holdings vs. Royal Caribbean Cruises | Booking Holdings 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |