Correlation Between Carnival Plc and Arcos Dorados
Can any of the company-specific risk be diversified away by investing in both Carnival Plc and Arcos Dorados 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 Plc and Arcos Dorados into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carnival Plc ADS and Arcos Dorados Holdings, you can compare the effects of market volatilities on Carnival Plc and Arcos Dorados 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 Plc with a short position of Arcos Dorados. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival Plc and Arcos Dorados.
Diversification Opportunities for Carnival Plc and Arcos Dorados
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Carnival and Arcos is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Carnival Plc ADS and Arcos Dorados Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcos Dorados Holdings and Carnival Plc 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 Plc ADS are associated (or correlated) with Arcos Dorados. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcos Dorados Holdings has no effect on the direction of Carnival Plc i.e., Carnival Plc and Arcos Dorados go up and down completely randomly.
Pair Corralation between Carnival Plc and Arcos Dorados
Considering the 90-day investment horizon Carnival Plc ADS is expected to generate 1.56 times more return on investment than Arcos Dorados. However, Carnival Plc is 1.56 times more volatile than Arcos Dorados Holdings. It trades about 0.06 of its potential returns per unit of risk. Arcos Dorados Holdings is currently generating about -0.05 per unit of risk. If you would invest 2,283 in Carnival Plc ADS on October 20, 2024 and sell it today you would earn a total of 56.00 from holding Carnival Plc ADS or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carnival Plc ADS vs. Arcos Dorados Holdings
Performance |
| Timeline |
| Carnival Plc ADS |
| Arcos Dorados Holdings |
Carnival Plc and Arcos Dorados Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carnival Plc and Arcos Dorados
The main advantage of trading using opposite Carnival Plc and Arcos Dorados positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnival Plc position performs unexpectedly, Arcos Dorados 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 Arcos Dorados will offset losses from the drop in Arcos Dorados' long position.| Carnival Plc vs. Callaway Golf | Carnival Plc vs. Peloton Interactive | Carnival Plc vs. Clarus Corp | Carnival Plc vs. Johnson Outdoors |
| Arcos Dorados vs. BJs Restaurants | Arcos Dorados vs. Dine Brands Global | Arcos Dorados vs. Brinker International | Arcos Dorados vs. Bloomin Brands |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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