Correlation Between TUI AG and Expedia
Can any of the company-specific risk be diversified away by investing in both TUI AG 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 TUI AG and Expedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TUI AG and Expedia Group, you can compare the effects of market volatilities on TUI AG 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 TUI AG with a short position of Expedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of TUI AG and Expedia.
Diversification Opportunities for TUI AG and Expedia
Very poor diversification
The 3 months correlation between TUI and Expedia is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding TUI AG and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia Group and TUI AG 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 TUI AG 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 TUI AG i.e., TUI AG and Expedia go up and down completely randomly.
Pair Corralation between TUI AG and Expedia
Assuming the 90 days horizon TUI AG is expected to generate 1.64 times less return on investment than Expedia. In addition to that, TUI AG is 1.41 times more volatile than Expedia Group. It trades about 0.03 of its total potential returns per unit of risk. Expedia Group is currently generating about 0.07 per unit of volatility. If you would invest 10,767 in Expedia Group on August 31, 2024 and sell it today you would earn a total of 7,695 from holding Expedia Group or generate 71.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
TUI AG vs. Expedia Group
Performance |
| Timeline |
| TUI AG |
| Expedia Group |
TUI AG and Expedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TUI AG and Expedia
The main advantage of trading using opposite TUI AG and Expedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TUI AG 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.| TUI AG vs. Expedia Group | TUI AG vs. Trip Group Ltd | TUI AG vs. Booking Holdings | TUI AG vs. Despegar Corp |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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