Correlation Between Spotify Technology and Booking Holdings
Can any of the company-specific risk be diversified away by investing in both Spotify Technology 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 Spotify Technology and Booking Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spotify Technology SA and Booking Holdings, you can compare the effects of market volatilities on Spotify Technology 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 Spotify Technology with a short position of Booking Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spotify Technology and Booking Holdings.
Diversification Opportunities for Spotify Technology and Booking Holdings
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Spotify and Booking is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA and Booking Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booking Holdings and Spotify Technology 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 Spotify Technology SA 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 Spotify Technology i.e., Spotify Technology and Booking Holdings go up and down completely randomly.
Pair Corralation between Spotify Technology and Booking Holdings
Assuming the 90 days trading horizon Spotify Technology SA is expected to generate 1.34 times more return on investment than Booking Holdings. However, Spotify Technology is 1.34 times more volatile than Booking Holdings. It trades about 0.16 of its potential returns per unit of risk. Booking Holdings is currently generating about 0.12 per unit of risk. If you would invest 10,806 in Spotify Technology SA on September 3, 2024 and sell it today you would earn a total of 60,953 from holding Spotify Technology SA or generate 564.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Spotify Technology SA vs. Booking Holdings
Performance |
| Timeline |
| Spotify Technology |
| Booking Holdings |
Spotify Technology and Booking Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spotify Technology and Booking Holdings
The main advantage of trading using opposite Spotify Technology and Booking Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spotify Technology 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.| Spotify Technology vs. Alphabet | Spotify Technology vs. Alphabet | Spotify Technology vs. Airbnb Inc | Spotify Technology vs. Baidu Inc |
| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |