Correlation Between Carnival and Expedia
Can any of the company-specific risk be diversified away by investing in both Carnival 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 Carnival and Expedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carnival and Expedia Group, you can compare the effects of market volatilities on Carnival 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 Carnival with a short position of Expedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival and Expedia.
Diversification Opportunities for Carnival and Expedia
Poor diversification
The 3 months correlation between Carnival and Expedia is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Carnival and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia Group and Carnival 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 Carnival 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 Carnival i.e., Carnival and Expedia go up and down completely randomly.
Pair Corralation between Carnival and Expedia
Considering the 90-day investment horizon Carnival is expected to under-perform the Expedia. In addition to that, Carnival is 1.06 times more volatile than Expedia Group. It trades about -0.02 of its total potential returns per unit of risk. Expedia Group is currently generating about 0.0 per unit of volatility. If you would invest 18,177 in Expedia Group on March 16, 2025 and sell it today you would lose (1,007) from holding Expedia Group or give up 5.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carnival vs. Expedia Group
Performance |
| Timeline |
| Carnival |
| Expedia Group |
Carnival and Expedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carnival and Expedia
The main advantage of trading using opposite Carnival and Expedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnival 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.| Carnival vs. Royal Caribbean Cruises | Carnival vs. Airbnb Inc | Carnival vs. Expedia Group | Carnival vs. Booking 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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