Correlation Between Travel Leisure and Expedia
Can any of the company-specific risk be diversified away by investing in both Travel Leisure 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 Travel Leisure and Expedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Travel Leisure Co and Expedia Group, you can compare the effects of market volatilities on Travel Leisure 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 Travel Leisure with a short position of Expedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travel Leisure and Expedia.
Diversification Opportunities for Travel Leisure and Expedia
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Travel and Expedia is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Travel Leisure Co and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia Group and Travel Leisure 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 Travel Leisure Co 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 Travel Leisure i.e., Travel Leisure and Expedia go up and down completely randomly.
Pair Corralation between Travel Leisure and Expedia
Considering the 90-day investment horizon Travel Leisure is expected to generate 1.09 times less return on investment than Expedia. But when comparing it to its historical volatility, Travel Leisure Co is 1.18 times less risky than Expedia. It trades about 0.41 of its potential returns per unit of risk. Expedia Group is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 15,836 in Expedia Group on August 24, 2024 and sell it today you would earn a total of 2,515 from holding Expedia Group or generate 15.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Travel Leisure Co vs. Expedia Group
Performance |
| Timeline |
| Travel Leisure |
| Expedia Group |
Travel Leisure and Expedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travel Leisure and Expedia
The main advantage of trading using opposite Travel Leisure and Expedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travel Leisure 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.| Travel Leisure vs. Yatra Online | Travel Leisure vs. Despegar Corp | Travel Leisure vs. Lindblad Expeditions Holdings | Travel Leisure vs. Mondee 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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