Correlation Between Booking Holdings and Carnival Plc
Can any of the company-specific risk be diversified away by investing in both Booking Holdings and Carnival Plc 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 Booking Holdings and Carnival Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Booking Holdings and Carnival plc, you can compare the effects of market volatilities on Booking Holdings and Carnival Plc 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 Booking Holdings with a short position of Carnival Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booking Holdings and Carnival Plc.
Diversification Opportunities for Booking Holdings and Carnival Plc
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Booking and Carnival is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Booking Holdings and Carnival plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival plc and Booking Holdings 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 Booking Holdings are associated (or correlated) with Carnival Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival plc has no effect on the direction of Booking Holdings i.e., Booking Holdings and Carnival Plc go up and down completely randomly.
Pair Corralation between Booking Holdings and Carnival Plc
Assuming the 90 days trading horizon Booking Holdings is expected to generate 0.73 times more return on investment than Carnival Plc. However, Booking Holdings is 1.37 times less risky than Carnival Plc. It trades about 0.53 of its potential returns per unit of risk. Carnival plc is currently generating about 0.32 per unit of risk. If you would invest 402,400 in Booking Holdings on August 28, 2024 and sell it today you would earn a total of 92,200 from holding Booking Holdings or generate 22.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Booking Holdings vs. Carnival plc
Performance |
| Timeline |
| Booking Holdings |
| Carnival plc |
Booking Holdings and Carnival Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Booking Holdings and Carnival Plc
The main advantage of trading using opposite Booking Holdings and Carnival Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Booking Holdings position performs unexpectedly, Carnival Plc 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 Plc will offset losses from the drop in Carnival Plc's long position.| Booking Holdings vs. BRIT AMER TOBACCO | Booking Holdings vs. SOLSTAD OFFSHORE NK | Booking Holdings vs. Sqs Software Quality | Booking Holdings vs. NORTHEAST UTILITIES |
| Carnival Plc vs. Tower One Wireless | Carnival Plc vs. Entravision Communications | Carnival Plc vs. KENEDIX OFFICE INV | Carnival Plc vs. CDN IMPERIAL BANK |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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