Correlation Between Booking Holdings and Royal Caribbean
Can any of the company-specific risk be diversified away by investing in both Booking Holdings and Royal Caribbean 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 Royal Caribbean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Booking Holdings and Royal Caribbean Group, you can compare the effects of market volatilities on Booking Holdings and Royal Caribbean 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 Royal Caribbean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booking Holdings and Royal Caribbean.
Diversification Opportunities for Booking Holdings and Royal Caribbean
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Booking and Royal is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Booking Holdings and Royal Caribbean Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Caribbean Group 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 Royal Caribbean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Caribbean Group has no effect on the direction of Booking Holdings i.e., Booking Holdings and Royal Caribbean go up and down completely randomly.
Pair Corralation between Booking Holdings and Royal Caribbean
Assuming the 90 days trading horizon Booking Holdings is expected to generate 2.96 times less return on investment than Royal Caribbean. But when comparing it to its historical volatility, Booking Holdings is 1.1 times less risky than Royal Caribbean. It trades about 0.04 of its potential returns per unit of risk. Royal Caribbean Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 21,966 in Royal Caribbean Group on October 19, 2024 and sell it today you would earn a total of 1,609 from holding Royal Caribbean Group or generate 7.32% 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. Royal Caribbean Group
Performance |
| Timeline |
| Booking Holdings |
| Royal Caribbean Group |
Booking Holdings and Royal Caribbean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Booking Holdings and Royal Caribbean
The main advantage of trading using opposite Booking Holdings and Royal Caribbean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Booking Holdings position performs unexpectedly, Royal Caribbean 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 Royal Caribbean will offset losses from the drop in Royal Caribbean's long position.| Booking Holdings vs. Oriental Land Co | Booking Holdings vs. ANTA Sports Products | Booking Holdings vs. Li Ning Company | Booking Holdings vs. Trip Group Limited |
| Royal Caribbean vs. Booking Holdings | Royal Caribbean vs. Oriental Land Co | Royal Caribbean vs. ANTA Sports Products | Royal Caribbean vs. Li Ning Company |
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.
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