Correlation Between Transat AT and Airbnb
Can any of the company-specific risk be diversified away by investing in both Transat AT 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 Transat AT and Airbnb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transat AT and Airbnb Inc, you can compare the effects of market volatilities on Transat AT 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 Transat AT with a short position of Airbnb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transat AT and Airbnb.
Diversification Opportunities for Transat AT and Airbnb
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Transat and Airbnb is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Transat AT and Airbnb Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbnb Inc and Transat AT 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 Transat AT 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 Transat AT i.e., Transat AT and Airbnb go up and down completely randomly.
Pair Corralation between Transat AT and Airbnb
Assuming the 90 days horizon Transat AT is expected to generate 6.16 times less return on investment than Airbnb. In addition to that, Transat AT is 1.28 times more volatile than Airbnb Inc. It trades about 0.01 of its total potential returns per unit of risk. Airbnb Inc is currently generating about 0.1 per unit of volatility. If you would invest 12,681 in Airbnb Inc on August 31, 2024 and sell it today you would earn a total of 1,147 from holding Airbnb Inc or generate 9.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transat AT vs. Airbnb Inc
Performance |
| Timeline |
| Transat AT |
| Airbnb Inc |
Transat AT and Airbnb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transat AT and Airbnb
The main advantage of trading using opposite Transat AT and Airbnb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transat AT 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.| Transat AT vs. Porsche Automobile Holding | Transat AT vs. Ferrari NV | Transat AT vs. Toyota Motor | Transat AT vs. General Motors |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |