Correlation Between Expedia and Red Rock
Can any of the company-specific risk be diversified away by investing in both Expedia and Red Rock 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 Red Rock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Expedia Group and Red Rock Resorts, you can compare the effects of market volatilities on Expedia and Red Rock 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 Red Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expedia and Red Rock.
Diversification Opportunities for Expedia and Red Rock
Excellent diversification
The 3 months correlation between Expedia and Red is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Expedia Group and Red Rock Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Rock Resorts 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 Red Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Rock Resorts has no effect on the direction of Expedia i.e., Expedia and Red Rock go up and down completely randomly.
Pair Corralation between Expedia and Red Rock
Given the investment horizon of 90 days Expedia Group is expected to generate 0.81 times more return on investment than Red Rock. However, Expedia Group is 1.23 times less risky than Red Rock. It trades about 0.31 of its potential returns per unit of risk. Red Rock Resorts is currently generating about -0.09 per unit of risk. If you would invest 13,674 in Expedia Group on September 2, 2024 and sell it today you would earn a total of 4,788 from holding Expedia Group or generate 35.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Expedia Group vs. Red Rock Resorts
Performance |
| Timeline |
| Expedia Group |
| Red Rock Resorts |
Expedia and Red Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Expedia and Red Rock
The main advantage of trading using opposite Expedia and Red Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expedia position performs unexpectedly, Red Rock 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 Red Rock will offset losses from the drop in Red Rock's long position.| Expedia vs. Mondee Holdings | Expedia vs. MakeMyTrip Limited | Expedia vs. Tuniu Corp | Expedia vs. TripAdvisor |
| Red Rock vs. Golden Entertainment | Red Rock vs. Century Casinos | Red Rock vs. Studio City International | Red Rock vs. Ballys 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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