Correlation Between Carnival and TUI AG
Can any of the company-specific risk be diversified away by investing in both Carnival 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 Carnival and TUI AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carnival and TUI AG, you can compare the effects of market volatilities on Carnival 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 Carnival with a short position of TUI AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival and TUI AG.
Diversification Opportunities for Carnival and TUI AG
Very poor diversification
The 3 months correlation between Carnival and TUI is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Carnival and TUI AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TUI AG 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 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 Carnival i.e., Carnival and TUI AG go up and down completely randomly.
Pair Corralation between Carnival and TUI AG
Considering the 90-day investment horizon Carnival is expected to generate 0.79 times more return on investment than TUI AG. However, Carnival is 1.27 times less risky than TUI AG. It trades about 0.29 of its potential returns per unit of risk. TUI AG is currently generating about -0.05 per unit of risk. If you would invest 2,216 in Carnival on August 31, 2024 and sell it today you would earn a total of 298.00 from holding Carnival or generate 13.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carnival vs. TUI AG
Performance |
| Timeline |
| Carnival |
| TUI AG |
Carnival and TUI AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carnival and TUI AG
The main advantage of trading using opposite Carnival and TUI AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnival 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.| Carnival vs. Royal Caribbean Cruises | Carnival vs. Airbnb Inc | Carnival vs. Expedia Group | Carnival vs. Booking Holdings |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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