Correlation Between Yamaha and Expedia
Can any of the company-specific risk be diversified away by investing in both Yamaha 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 Yamaha and Expedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yamaha and Expedia Group, you can compare the effects of market volatilities on Yamaha 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 Yamaha with a short position of Expedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yamaha and Expedia.
Diversification Opportunities for Yamaha and Expedia
Excellent diversification
The 3 months correlation between Yamaha and Expedia is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Yamaha and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia Group and Yamaha 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 Yamaha 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 Yamaha i.e., Yamaha and Expedia go up and down completely randomly.
Pair Corralation between Yamaha and Expedia
Assuming the 90 days horizon Yamaha is expected to under-perform the Expedia. In addition to that, Yamaha is 1.21 times more volatile than Expedia Group. It trades about -0.15 of its total potential returns per unit of risk. Expedia Group is currently generating about 0.26 per unit of volatility. If you would invest 14,940 in Expedia Group on August 28, 2024 and sell it today you would earn a total of 2,618 from holding Expedia Group or generate 17.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yamaha vs. Expedia Group
Performance |
| Timeline |
| Yamaha |
| Expedia Group |
Yamaha and Expedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yamaha and Expedia
The main advantage of trading using opposite Yamaha and Expedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yamaha 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.The idea behind Yamaha and Expedia Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Expedia vs. Playtech plc | Expedia vs. Molson Coors Beverage | Expedia vs. PLAYTIKA HOLDING DL 01 | Expedia vs. JD SPORTS FASH |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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