Correlation Between Royal Caribbean and Antofagasta PLC
Can any of the company-specific risk be diversified away by investing in both Royal Caribbean and Antofagasta 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 Royal Caribbean and Antofagasta PLC 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 Antofagasta PLC, you can compare the effects of market volatilities on Royal Caribbean and Antofagasta 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 Royal Caribbean with a short position of Antofagasta PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Caribbean and Antofagasta PLC.
Diversification Opportunities for Royal Caribbean and Antofagasta PLC
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Royal and Antofagasta is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Royal Caribbean Cruises and Antofagasta PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antofagasta PLC 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 Antofagasta PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antofagasta PLC has no effect on the direction of Royal Caribbean i.e., Royal Caribbean and Antofagasta PLC go up and down completely randomly.
Pair Corralation between Royal Caribbean and Antofagasta PLC
Considering the 90-day investment horizon Royal Caribbean Cruises is expected to generate 0.69 times more return on investment than Antofagasta PLC. However, Royal Caribbean Cruises is 1.45 times less risky than Antofagasta PLC. It trades about 0.14 of its potential returns per unit of risk. Antofagasta PLC is currently generating about 0.03 per unit of risk. If you would invest 5,696 in Royal Caribbean Cruises on August 29, 2024 and sell it today you would earn a total of 18,754 from holding Royal Caribbean Cruises or generate 329.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 84.68% |
| Values | Daily Returns |
Royal Caribbean Cruises vs. Antofagasta PLC
Performance |
| Timeline |
| Royal Caribbean Cruises |
| Antofagasta PLC |
Royal Caribbean and Antofagasta PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Caribbean and Antofagasta PLC
The main advantage of trading using opposite Royal Caribbean and Antofagasta PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Caribbean position performs unexpectedly, Antofagasta 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 Antofagasta PLC will offset losses from the drop in Antofagasta PLC's long position.| Royal Caribbean vs. Carnival | Royal Caribbean vs. Airbnb Inc | Royal Caribbean vs. Expedia Group | Royal Caribbean vs. Booking Holdings |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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