Correlation Between Trip Group and Airbnb
Can any of the company-specific risk be diversified away by investing in both Trip Group and Airbnb 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 Trip Group and Airbnb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trip Group Ltd and Airbnb Inc, you can compare the effects of market volatilities on Trip Group and Airbnb 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 Trip Group with a short position of Airbnb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trip Group and Airbnb.
Diversification Opportunities for Trip Group and Airbnb
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Trip and Airbnb is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Trip Group Ltd and Airbnb Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbnb Inc and Trip Group 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 Trip Group Ltd are associated (or correlated) with Airbnb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbnb Inc has no effect on the direction of Trip Group i.e., Trip Group and Airbnb go up and down completely randomly.
Pair Corralation between Trip Group and Airbnb
Given the investment horizon of 90 days Trip Group Ltd is expected to generate 0.99 times more return on investment than Airbnb. However, Trip Group Ltd is 1.02 times less risky than Airbnb. It trades about 0.12 of its potential returns per unit of risk. Airbnb Inc is currently generating about 0.03 per unit of risk. If you would invest 6,144 in Trip Group Ltd on August 24, 2024 and sell it today you would earn a total of 373.00 from holding Trip Group Ltd or generate 6.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trip Group Ltd vs. Airbnb Inc
Performance |
| Timeline |
| Trip Group |
| Airbnb Inc |
Trip Group and Airbnb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trip Group and Airbnb
The main advantage of trading using opposite Trip Group and Airbnb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trip Group position performs unexpectedly, Airbnb 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 Airbnb will offset losses from the drop in Airbnb's long position.| Trip Group vs. Expedia Group | Trip Group vs. Booking Holdings | Trip Group vs. Despegar Corp | Trip Group vs. Travel Leisure Co |
| Airbnb vs. Norwegian Cruise Line | Airbnb vs. Royal Caribbean Cruises | Airbnb vs. Expedia Group | Airbnb vs. Booking Holdings |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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