Correlation Between Expedia and Travel Leisure
Can any of the company-specific risk be diversified away by investing in both Expedia and Travel Leisure 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 Travel Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Expedia Group and Travel Leisure Co, you can compare the effects of market volatilities on Expedia and Travel Leisure 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 Travel Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expedia and Travel Leisure.
Diversification Opportunities for Expedia and Travel Leisure
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Expedia and Travel is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Expedia Group and Travel Leisure Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travel Leisure 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 Travel Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Travel Leisure has no effect on the direction of Expedia i.e., Expedia and Travel Leisure go up and down completely randomly.
Pair Corralation between Expedia and Travel Leisure
Given the investment horizon of 90 days Expedia Group is expected to generate 1.16 times more return on investment than Travel Leisure. However, Expedia is 1.16 times more volatile than Travel Leisure Co. It trades about 0.43 of its potential returns per unit of risk. Travel Leisure Co is currently generating about 0.4 per unit of risk. If you would invest 15,800 in Expedia Group on August 27, 2024 and sell it today you would earn a total of 2,692 from holding Expedia Group or generate 17.04% 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. Travel Leisure Co
Performance |
| Timeline |
| Expedia Group |
| Travel Leisure |
Expedia and Travel Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Expedia and Travel Leisure
The main advantage of trading using opposite Expedia and Travel Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expedia position performs unexpectedly, Travel Leisure 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 Travel Leisure will offset losses from the drop in Travel Leisure's long position.| Expedia vs. Airbnb Inc | Expedia vs. TripAdvisor | Expedia vs. Royal Caribbean Cruises | Expedia vs. Norwegian Cruise Line |
| Travel Leisure vs. Yatra Online | Travel Leisure vs. Mondee Holdings | Travel Leisure vs. Tuniu Corp | Travel Leisure vs. TripAdvisor |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |