Correlation Between Royal Caribbean and Airbnb
Can any of the company-specific risk be diversified away by investing in both Royal Caribbean 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 Royal Caribbean and Airbnb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Caribbean Cruises and Airbnb Inc, you can compare the effects of market volatilities on Royal Caribbean 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 Royal Caribbean with a short position of Airbnb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Caribbean and Airbnb.
Diversification Opportunities for Royal Caribbean and Airbnb
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Royal and Airbnb is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Royal Caribbean Cruises and Airbnb Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbnb Inc and Royal Caribbean 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 Royal Caribbean Cruises 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 Royal Caribbean i.e., Royal Caribbean and Airbnb go up and down completely randomly.
Pair Corralation between Royal Caribbean and Airbnb
Considering the 90-day investment horizon Royal Caribbean Cruises is expected to generate 1.08 times more return on investment than Airbnb. However, Royal Caribbean is 1.08 times more volatile than Airbnb Inc. It trades about 0.38 of its potential returns per unit of risk. Airbnb Inc is currently generating about 0.26 per unit of risk. If you would invest 23,219 in Royal Caribbean Cruises on March 9, 2025 and sell it today you would earn a total of 4,415 from holding Royal Caribbean Cruises or generate 19.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Caribbean Cruises vs. Airbnb Inc
Performance |
| Timeline |
| Royal Caribbean Cruises |
| Airbnb Inc |
Royal Caribbean and Airbnb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Caribbean and Airbnb
The main advantage of trading using opposite Royal Caribbean and Airbnb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Caribbean 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.| Royal Caribbean vs. Carnival | Royal Caribbean vs. Airbnb Inc | Royal Caribbean vs. Expedia Group | Royal Caribbean vs. Booking Holdings |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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