Correlation Between Carnival and Trip Group
Can any of the company-specific risk be diversified away by investing in both Carnival and Trip Group 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 Trip Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carnival and Trip Group Ltd, you can compare the effects of market volatilities on Carnival and Trip Group 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 Trip Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival and Trip Group.
Diversification Opportunities for Carnival and Trip Group
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carnival and Trip is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Carnival and Trip Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trip Group 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 Trip Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trip Group has no effect on the direction of Carnival i.e., Carnival and Trip Group go up and down completely randomly.
Pair Corralation between Carnival and Trip Group
Considering the 90-day investment horizon Carnival is expected to generate 0.85 times more return on investment than Trip Group. However, Carnival is 1.17 times less risky than Trip Group. It trades about 0.41 of its potential returns per unit of risk. Trip Group Ltd is currently generating about 0.12 per unit of risk. If you would invest 2,100 in Carnival on August 24, 2024 and sell it today you would earn a total of 435.00 from holding Carnival or generate 20.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carnival vs. Trip Group Ltd
Performance |
| Timeline |
| Carnival |
| Trip Group |
Carnival and Trip Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carnival and Trip Group
The main advantage of trading using opposite Carnival and Trip Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnival position performs unexpectedly, Trip Group 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 Trip Group will offset losses from the drop in Trip Group's long position.| Carnival vs. Royal Caribbean Cruises | Carnival vs. Airbnb Inc | Carnival vs. Expedia Group | Carnival vs. Booking Holdings |
| Trip Group vs. Expedia Group | Trip Group vs. Booking Holdings | Trip Group vs. Despegar Corp | Trip Group vs. Travel Leisure Co |
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 Stocks Directory module to find actively traded stocks across global markets.
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