Correlation Between Expedia and Trip Group
Can any of the company-specific risk be diversified away by investing in both Expedia and Trip Group 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 Trip Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Expedia Group and Trip Group Ltd, you can compare the effects of market volatilities on Expedia and Trip Group 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 Trip Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expedia and Trip Group.
Diversification Opportunities for Expedia and Trip Group
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Expedia and Trip is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Expedia Group and Trip Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trip Group 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 Trip Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trip Group has no effect on the direction of Expedia i.e., Expedia and Trip Group go up and down completely randomly.
Pair Corralation between Expedia and Trip Group
Given the investment horizon of 90 days Expedia Group is expected to generate 1.01 times more return on investment than Trip Group. However, Expedia is 1.01 times more volatile than Trip Group Ltd. It trades about 0.08 of its potential returns per unit of risk. Trip Group Ltd is currently generating about 0.08 per unit of risk. If you would invest 9,354 in Expedia Group on August 27, 2024 and sell it today you would earn a total of 9,138 from holding Expedia Group or generate 97.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Expedia Group vs. Trip Group Ltd
Performance |
| Timeline |
| Expedia Group |
| Trip Group |
Expedia and Trip Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Expedia and Trip Group
The main advantage of trading using opposite Expedia and Trip Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expedia position performs unexpectedly, Trip Group 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 Trip Group will offset losses from the drop in Trip Group's long position.| Expedia vs. Airbnb Inc | Expedia vs. TripAdvisor | Expedia vs. Royal Caribbean Cruises | Expedia vs. Norwegian Cruise Line |
| Trip Group vs. Expedia Group | Trip Group vs. Booking Holdings | Trip Group vs. Despegar Corp | Trip Group vs. Travel Leisure Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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