Correlation Between Royal Caribbean and Booking Holdings
Can any of the company-specific risk be diversified away by investing in both Royal Caribbean 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 Royal Caribbean and Booking Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Caribbean Cruises and Booking Holdings, you can compare the effects of market volatilities on Royal Caribbean 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 Royal Caribbean with a short position of Booking Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Caribbean and Booking Holdings.
Diversification Opportunities for Royal Caribbean and Booking Holdings
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Royal and Booking is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Royal Caribbean Cruises and Booking Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booking Holdings and Royal Caribbean 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 Royal Caribbean Cruises 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 Royal Caribbean i.e., Royal Caribbean and Booking Holdings go up and down completely randomly.
Pair Corralation between Royal Caribbean and Booking Holdings
Assuming the 90 days trading horizon Royal Caribbean Cruises is expected to generate 1.15 times more return on investment than Booking Holdings. However, Royal Caribbean is 1.15 times more volatile than Booking Holdings. It trades about 0.15 of its potential returns per unit of risk. Booking Holdings is currently generating about 0.12 per unit of risk. If you would invest 15,004 in Royal Caribbean Cruises on September 3, 2024 and sell it today you would earn a total of 58,871 from holding Royal Caribbean Cruises or generate 392.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Caribbean Cruises vs. Booking Holdings
Performance |
| Timeline |
| Royal Caribbean Cruises |
| Booking Holdings |
Royal Caribbean and Booking Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Caribbean and Booking Holdings
The main advantage of trading using opposite Royal Caribbean and Booking Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Caribbean 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.| Royal Caribbean vs. salesforce inc | Royal Caribbean vs. Align Technology | Royal Caribbean vs. Delta Air Lines | Royal Caribbean vs. Tyson Foods |
| Booking Holdings vs. Spotify Technology SA | Booking Holdings vs. Extra Space Storage | Booking Holdings vs. Electronic Arts | Booking Holdings vs. Metalurgica Gerdau SA |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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