Correlation Between Investor and Expedia

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Can any of the company-specific risk be diversified away by investing in both Investor 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 Investor and Expedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investor AB and Expedia Group, you can compare the effects of market volatilities on Investor 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 Investor with a short position of Expedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and Expedia.

Diversification Opportunities for Investor and Expedia

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Investor and Expedia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia Group and Investor 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 Investor AB 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 Investor i.e., Investor and Expedia go up and down completely randomly.

Pair Corralation between Investor and Expedia

If you would invest  0.00  in Investor AB on December 29, 2023 and sell it today you would earn a total of  0.00  from holding Investor AB or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.2%
ValuesDaily Returns

Investor AB  vs.  Expedia Group

 Performance 
       Timeline  
Investor AB 

Risk-Adjusted Performance

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Over the last 90 days Investor AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Investor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Expedia Group 

Risk-Adjusted Performance

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Low
 
High
Insignificant
Over the last 90 days Expedia Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Investor and Expedia Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Investor and Expedia

The main advantage of trading using opposite Investor and Expedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor 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 Investor AB 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.
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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