Correlation Between Booking Holdings and Flight Centre
Can any of the company-specific risk be diversified away by investing in both Booking Holdings and Flight Centre 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 Flight Centre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Booking Holdings and Flight Centre Travel, you can compare the effects of market volatilities on Booking Holdings and Flight Centre 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 Flight Centre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booking Holdings and Flight Centre.
Diversification Opportunities for Booking Holdings and Flight Centre
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Booking and Flight is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Booking Holdings and Flight Centre Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flight Centre Travel 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 Flight Centre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flight Centre Travel has no effect on the direction of Booking Holdings i.e., Booking Holdings and Flight Centre go up and down completely randomly.
Pair Corralation between Booking Holdings and Flight Centre
Assuming the 90 days trading horizon Booking Holdings is expected to generate 0.86 times more return on investment than Flight Centre. However, Booking Holdings is 1.17 times less risky than Flight Centre. It trades about 0.12 of its potential returns per unit of risk. Flight Centre Travel is currently generating about -0.01 per unit of risk. If you would invest 239,219 in Booking Holdings on September 2, 2024 and sell it today you would earn a total of 253,481 from holding Booking Holdings or generate 105.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Booking Holdings vs. Flight Centre Travel
Performance |
| Timeline |
| Booking Holdings |
| Flight Centre Travel |
Booking Holdings and Flight Centre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Booking Holdings and Flight Centre
The main advantage of trading using opposite Booking Holdings and Flight Centre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Booking Holdings position performs unexpectedly, Flight Centre 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 Flight Centre will offset losses from the drop in Flight Centre's long position.| Booking Holdings vs. SOFI TECHNOLOGIES | Booking Holdings vs. AAC TECHNOLOGHLDGADR | Booking Holdings vs. Taiwan Semiconductor Manufacturing | Booking Holdings vs. Digilife Technologies Limited |
| Flight Centre vs. DeVry Education Group | Flight Centre vs. Adtalem Global Education | Flight Centre vs. PLAY2CHILL SA ZY | Flight Centre vs. Laureate Education |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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