Correlation Between Norwegian Cruise and Expedia
Can any of the company-specific risk be diversified away by investing in both Norwegian Cruise 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 Norwegian Cruise and Expedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norwegian Cruise Line and Expedia Group, you can compare the effects of market volatilities on Norwegian Cruise 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 Norwegian Cruise with a short position of Expedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Cruise and Expedia.
Diversification Opportunities for Norwegian Cruise and Expedia
0.89 | Correlation Coefficient |
Very poor diversification
The 1 month correlation between Norwegian and Expedia is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Cruise Line and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia Group and Norwegian Cruise 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 Norwegian Cruise Line 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 Norwegian Cruise i.e., Norwegian Cruise and Expedia go up and down completely randomly.
Pair Corralation between Norwegian Cruise and Expedia
Given the investment horizon of 90 days Norwegian Cruise Line is expected to under-perform the Expedia. In addition to that, Norwegian Cruise is 2.57 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 -0.28 per unit of volatility. If you would invest 13,810 in Expedia Group on January 20, 2024 and sell it today you would lose (980.00) from holding Expedia Group or give up 7.1% of portfolio value over 90 days.
| Time Period | 1 Month [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norwegian Cruise Line vs. Expedia Group
Performance |
| Timeline |
| Norwegian Cruise Line |
| Expedia Group |
Norwegian Cruise and Expedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Cruise and Expedia
The main advantage of trading using opposite Norwegian Cruise and Expedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Cruise 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.| Norwegian Cruise vs. Yatra Online | Norwegian Cruise vs. Despegar Corp | Norwegian Cruise vs. Mondee Holdings | Norwegian Cruise vs. MakeMyTrip Limited |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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