Correlation Between Carnival Plc and Expedia
Can any of the company-specific risk be diversified away by investing in both Carnival Plc 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 Carnival Plc and Expedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carnival plc and Expedia Group, you can compare the effects of market volatilities on Carnival Plc 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 Carnival Plc with a short position of Expedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival Plc and Expedia.
Diversification Opportunities for Carnival Plc and Expedia
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Carnival and Expedia is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Carnival plc and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia Group 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 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 Carnival Plc i.e., Carnival Plc and Expedia go up and down completely randomly.
Pair Corralation between Carnival Plc and Expedia
Assuming the 90 days trading horizon Carnival plc is expected to generate 1.16 times more return on investment than Expedia. However, Carnival Plc is 1.16 times more volatile than Expedia Group. It trades about 0.08 of its potential returns per unit of risk. Expedia Group is currently generating about 0.07 per unit of risk. If you would invest 850.00 in Carnival plc on August 28, 2024 and sell it today you would earn a total of 1,550 from holding Carnival plc or generate 182.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carnival plc vs. Expedia Group
Performance |
| Timeline |
| Carnival plc |
| Expedia Group |
Carnival Plc and Expedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carnival Plc and Expedia
The main advantage of trading using opposite Carnival Plc and Expedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnival Plc 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.| Carnival Plc vs. Tower One Wireless | Carnival Plc vs. Entravision Communications | Carnival Plc vs. KENEDIX OFFICE INV | Carnival Plc vs. CDN IMPERIAL BANK |
| Expedia vs. Playtech plc | Expedia vs. Molson Coors Beverage | Expedia vs. PLAYTIKA HOLDING DL 01 | Expedia vs. JD SPORTS FASH |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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