Correlation Between Royal Caribbean and Lagardere
Can any of the company-specific risk be diversified away by investing in both Royal Caribbean and Lagardere 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 Lagardere 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 Lagardere SA, you can compare the effects of market volatilities on Royal Caribbean and Lagardere 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 Lagardere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Caribbean and Lagardere.
Diversification Opportunities for Royal Caribbean and Lagardere
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Royal and Lagardere is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Royal Caribbean Cruises and Lagardere SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lagardere SA 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 Lagardere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lagardere SA has no effect on the direction of Royal Caribbean i.e., Royal Caribbean and Lagardere go up and down completely randomly.
Pair Corralation between Royal Caribbean and Lagardere
Considering the 90-day investment horizon Royal Caribbean Cruises is expected to generate 1.44 times more return on investment than Lagardere. However, Royal Caribbean is 1.44 times more volatile than Lagardere SA. It trades about 0.16 of its potential returns per unit of risk. Lagardere SA is currently generating about 0.03 per unit of risk. If you would invest 4,967 in Royal Caribbean Cruises on September 13, 2024 and sell it today you would earn a total of 19,585 from holding Royal Caribbean Cruises or generate 394.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 67.0% |
| Values | Daily Returns |
Royal Caribbean Cruises vs. Lagardere SA
Performance |
| Timeline |
| Royal Caribbean Cruises |
| Lagardere SA |
Royal Caribbean and Lagardere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Caribbean and Lagardere
The main advantage of trading using opposite Royal Caribbean and Lagardere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Caribbean position performs unexpectedly, Lagardere 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 Lagardere will offset losses from the drop in Lagardere'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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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