Correlation Between Trip Group and Expedia
Can any of the company-specific risk be diversified away by investing in both Trip Group and Expedia 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 Trip Group and Expedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trip Group Limited and Expedia Group, you can compare the effects of market volatilities on Trip Group and Expedia 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 Trip Group with a short position of Expedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trip Group and Expedia.
Diversification Opportunities for Trip Group and Expedia
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Trip and Expedia is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Trip Group Limited and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia Group and Trip Group 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 Trip Group Limited are associated (or correlated) with Expedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expedia Group has no effect on the direction of Trip Group i.e., Trip Group and Expedia go up and down completely randomly.
Pair Corralation between Trip Group and Expedia
Assuming the 90 days horizon Trip Group Limited is expected to generate 1.04 times more return on investment than Expedia. However, Trip Group is 1.04 times more volatile than Expedia Group. It trades about 0.06 of its potential returns per unit of risk. Expedia Group is currently generating about 0.06 per unit of risk. If you would invest 3,190 in Trip Group Limited on August 24, 2024 and sell it today you would earn a total of 3,070 from holding Trip Group Limited or generate 96.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trip Group Limited vs. Expedia Group
Performance |
| Timeline |
| Trip Group Limited |
| Expedia Group |
Trip Group and Expedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trip Group and Expedia
The main advantage of trading using opposite Trip Group and Expedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trip Group position performs unexpectedly, Expedia 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 Expedia will offset losses from the drop in Expedia's long position.| Trip Group vs. Harmony Gold Mining | Trip Group vs. Alfa Financial Software | Trip Group vs. Lion One Metals | Trip Group vs. Unity Software |
| Expedia vs. MeVis Medical Solutions | Expedia vs. ELMOS SEMICONDUCTOR | Expedia vs. ONWARD MEDICAL BV | Expedia vs. AIR PRODCHEMICALS |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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