Correlation Between Norwegian Cruise and Carnival
Can any of the company-specific risk be diversified away by investing in both Norwegian Cruise and Carnival 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 Carnival 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 Carnival, you can compare the effects of market volatilities on Norwegian Cruise and Carnival 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 Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Cruise and Carnival.
Diversification Opportunities for Norwegian Cruise and Carnival
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Norwegian and Carnival is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Cruise Line and Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival 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 Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival has no effect on the direction of Norwegian Cruise i.e., Norwegian Cruise and Carnival go up and down completely randomly.
Pair Corralation between Norwegian Cruise and Carnival
Given the investment horizon of 90 days Norwegian Cruise is expected to generate 1.37 times less return on investment than Carnival. In addition to that, Norwegian Cruise is 1.18 times more volatile than Carnival. It trades about 0.25 of its total potential returns per unit of risk. Carnival is currently generating about 0.41 per unit of volatility. If you would invest 2,100 in Carnival on August 24, 2024 and sell it today you would earn a total of 435.00 from holding Carnival or generate 20.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norwegian Cruise Line vs. Carnival
Performance |
| Timeline |
| Norwegian Cruise Line |
| Carnival |
Norwegian Cruise and Carnival Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Cruise and Carnival
The main advantage of trading using opposite Norwegian Cruise and Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Cruise position performs unexpectedly, Carnival 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 Carnival will offset losses from the drop in Carnival's long position.| Norwegian Cruise vs. Carnival | Norwegian Cruise vs. Airbnb Inc | Norwegian Cruise vs. Expedia Group | Norwegian Cruise vs. Booking Holdings |
| Carnival vs. Royal Caribbean Cruises | Carnival vs. Airbnb Inc | Carnival vs. Expedia Group | Carnival vs. Booking Holdings |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |