Correlation Between Transat AT and Carnival
Can any of the company-specific risk be diversified away by investing in both Transat AT and Carnival 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 Carnival into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transat AT and Carnival, you can compare the effects of market volatilities on Transat AT and Carnival 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 Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transat AT and Carnival.
Diversification Opportunities for Transat AT and Carnival
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Transat and Carnival is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Transat AT and Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival 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 Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival has no effect on the direction of Transat AT i.e., Transat AT and Carnival go up and down completely randomly.
Pair Corralation between Transat AT and Carnival
If you would invest 2,192 in Carnival on August 27, 2024 and sell it today you would earn a total of 327.00 from holding Carnival or generate 14.92% 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. Carnival
Performance |
| Timeline |
| Transat AT |
| Carnival |
Transat AT and Carnival Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transat AT and Carnival
The main advantage of trading using opposite Transat AT and Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transat AT position performs unexpectedly, Carnival 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 Carnival will offset losses from the drop in Carnival's long position.| Transat AT vs. FitLife Brands, Common | Transat AT vs. HUMANA INC | Transat AT vs. SCOR PK | Transat AT vs. Aquagold International |
| Carnival vs. Royal Caribbean Cruises | Carnival vs. Airbnb Inc | Carnival vs. Expedia Group | Carnival 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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