Correlation Between Expedia and Carnival Plc
Can any of the company-specific risk be diversified away by investing in both Expedia and Carnival Plc 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 Expedia and Carnival Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Expedia Group and Carnival Plc ADS, you can compare the effects of market volatilities on Expedia and Carnival Plc 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 Expedia with a short position of Carnival Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expedia and Carnival Plc.
Diversification Opportunities for Expedia and Carnival Plc
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Expedia and Carnival is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Expedia Group and Carnival Plc ADS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival Plc ADS and Expedia 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 Expedia Group are associated (or correlated) with Carnival Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival Plc ADS has no effect on the direction of Expedia i.e., Expedia and Carnival Plc go up and down completely randomly.
Pair Corralation between Expedia and Carnival Plc
Given the investment horizon of 90 days Expedia is expected to generate 1.1 times less return on investment than Carnival Plc. But when comparing it to its historical volatility, Expedia Group is 1.18 times less risky than Carnival Plc. It trades about 0.37 of its potential returns per unit of risk. Carnival Plc ADS is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 1,924 in Carnival Plc ADS on August 24, 2024 and sell it today you would earn a total of 336.00 from holding Carnival Plc ADS or generate 17.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Expedia Group vs. Carnival Plc ADS
Performance |
| Timeline |
| Expedia Group |
| Carnival Plc ADS |
Expedia and Carnival Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Expedia and Carnival Plc
The main advantage of trading using opposite Expedia and Carnival Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expedia position performs unexpectedly, Carnival Plc 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 Carnival Plc will offset losses from the drop in Carnival Plc's long position.| Expedia vs. Airbnb Inc | Expedia vs. TripAdvisor | Expedia vs. Royal Caribbean Cruises | Expedia vs. Norwegian Cruise Line |
| Carnival Plc vs. Callaway Golf | Carnival Plc vs. Peloton Interactive | Carnival Plc vs. Vista Outdoor | Carnival Plc vs. Clarus 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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