Correlation Between Carriage Services and Booking Holdings
Can any of the company-specific risk be diversified away by investing in both Carriage Services 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 Carriage Services and Booking Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carriage Services and Booking Holdings, you can compare the effects of market volatilities on Carriage Services 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 Carriage Services with a short position of Booking Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carriage Services and Booking Holdings.
Diversification Opportunities for Carriage Services and Booking Holdings
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Carriage and Booking is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Carriage Services and Booking Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booking Holdings and Carriage Services 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 Carriage Services 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 Carriage Services i.e., Carriage Services and Booking Holdings go up and down completely randomly.
Pair Corralation between Carriage Services and Booking Holdings
Considering the 90-day investment horizon Carriage Services is expected to generate 1.57 times less return on investment than Booking Holdings. In addition to that, Carriage Services is 1.47 times more volatile than Booking Holdings. It trades about 0.05 of its total potential returns per unit of risk. Booking Holdings is currently generating about 0.12 per unit of volatility. If you would invest 202,760 in Booking Holdings on August 27, 2024 and sell it today you would earn a total of 314,955 from holding Booking Holdings or generate 155.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carriage Services vs. Booking Holdings
Performance |
| Timeline |
| Carriage Services |
| Booking Holdings |
Carriage Services and Booking Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carriage Services and Booking Holdings
The main advantage of trading using opposite Carriage Services and Booking Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carriage Services 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.| Carriage Services vs. Rollins | Carriage Services vs. Bright Horizons Family | Carriage Services vs. HR Block | Carriage Services vs. Frontdoor |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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