Correlation Between Royal Caribbean and Expedia
Can any of the company-specific risk be diversified away by investing in both Royal Caribbean and Expedia 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 Expedia 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 Expedia Group, you can compare the effects of market volatilities on Royal Caribbean and Expedia 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 Expedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Caribbean and Expedia.
Diversification Opportunities for Royal Caribbean and Expedia
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Royal and Expedia is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Royal Caribbean Cruises and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia Group 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 Expedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expedia Group has no effect on the direction of Royal Caribbean i.e., Royal Caribbean and Expedia go up and down completely randomly.
Pair Corralation between Royal Caribbean and Expedia
Considering the 90-day investment horizon Royal Caribbean Cruises is expected to generate 0.81 times more return on investment than Expedia. However, Royal Caribbean Cruises is 1.23 times less risky than Expedia. It trades about 0.15 of its potential returns per unit of risk. Expedia Group is currently generating about 0.08 per unit of risk. If you would invest 7,543 in Royal Caribbean Cruises on August 27, 2024 and sell it today you would earn a total of 16,606 from holding Royal Caribbean Cruises or generate 220.15% 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. Expedia Group
Performance |
| Timeline |
| Royal Caribbean Cruises |
| Expedia Group |
Royal Caribbean and Expedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Caribbean and Expedia
The main advantage of trading using opposite Royal Caribbean and Expedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Caribbean position performs unexpectedly, Expedia 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 Expedia will offset losses from the drop in Expedia's long position.| Royal Caribbean vs. Carnival | Royal Caribbean vs. Airbnb Inc | Royal Caribbean vs. Expedia Group | Royal Caribbean vs. Booking Holdings |
| Expedia vs. Airbnb Inc | Expedia vs. TripAdvisor | Expedia vs. Royal Caribbean Cruises | Expedia vs. Norwegian Cruise Line |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |