Correlation Between Norwegian Cruise and Booking Holdings
Can any of the company-specific risk be diversified away by investing in both Norwegian Cruise and Booking Holdings 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 Norwegian Cruise and Booking Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norwegian Cruise Line and Booking Holdings, you can compare the effects of market volatilities on Norwegian Cruise and Booking Holdings 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 Norwegian Cruise with a short position of Booking Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Cruise and Booking Holdings.
Diversification Opportunities for Norwegian Cruise and Booking Holdings
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Norwegian and Booking is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Cruise Line and Booking Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booking Holdings and Norwegian Cruise 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 Norwegian Cruise Line are associated (or correlated) with Booking Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booking Holdings has no effect on the direction of Norwegian Cruise i.e., Norwegian Cruise and Booking Holdings go up and down completely randomly.
Pair Corralation between Norwegian Cruise and Booking Holdings
Given the investment horizon of 90 days Norwegian Cruise Line is expected to generate 1.77 times more return on investment than Booking Holdings. However, Norwegian Cruise is 1.77 times more volatile than Booking Holdings. It trades about 0.17 of its potential returns per unit of risk. Booking Holdings is currently generating about 0.12 per unit of risk. If you would invest 1,991 in Norwegian Cruise Line on October 31, 2024 and sell it today you would earn a total of 855.00 from holding Norwegian Cruise Line or generate 42.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norwegian Cruise Line vs. Booking Holdings
Performance |
| Timeline |
| Norwegian Cruise Line |
| Booking Holdings |
Norwegian Cruise and Booking Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Cruise and Booking Holdings
The main advantage of trading using opposite Norwegian Cruise and Booking Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Cruise position performs unexpectedly, Booking Holdings 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 Booking Holdings will offset losses from the drop in Booking Holdings' long position.| Norwegian Cruise vs. Carnival | Norwegian Cruise vs. Airbnb Inc | Norwegian Cruise vs. Expedia Group | Norwegian Cruise vs. Booking Holdings |
| Booking Holdings vs. TripAdvisor | Booking Holdings vs. Airbnb Inc | Booking Holdings vs. Royal Caribbean Cruises | Booking Holdings vs. Norwegian Cruise Line |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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