Correlation Between Expedia and Lagardere
Can any of the company-specific risk be diversified away by investing in both Expedia and Lagardere 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 Lagardere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Expedia Group and Lagardere SA, you can compare the effects of market volatilities on Expedia and Lagardere 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 Lagardere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expedia and Lagardere.
Diversification Opportunities for Expedia and Lagardere
Pay attention - limited upside
The 3 months correlation between Expedia and Lagardere is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Expedia Group and Lagardere SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lagardere SA 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 Lagardere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lagardere SA has no effect on the direction of Expedia i.e., Expedia and Lagardere go up and down completely randomly.
Pair Corralation between Expedia and Lagardere
Given the investment horizon of 90 days Expedia Group is expected to generate 1.64 times more return on investment than Lagardere. However, Expedia is 1.64 times more volatile than Lagardere SA. It trades about 0.08 of its potential returns per unit of risk. Lagardere SA is currently generating about 0.03 per unit of risk. If you would invest 8,643 in Expedia Group on September 13, 2024 and sell it today you would earn a total of 10,386 from holding Expedia Group or generate 120.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 67.0% |
| Values | Daily Returns |
Expedia Group vs. Lagardere SA
Performance |
| Timeline |
| Expedia Group |
| Lagardere SA |
Expedia and Lagardere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Expedia and Lagardere
The main advantage of trading using opposite Expedia and Lagardere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expedia position performs unexpectedly, Lagardere 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 Lagardere will offset losses from the drop in Lagardere's long position.| Expedia vs. Airbnb Inc | Expedia vs. TripAdvisor | Expedia vs. Royal Caribbean Cruises | Expedia vs. Norwegian Cruise Line |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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