Correlation Between Lindblad Expeditions and Carnival

Can any of the company-specific risk be diversified away by investing in both Lindblad Expeditions and Carnival 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 Lindblad Expeditions and Carnival into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lindblad Expeditions Holdings and Carnival, you can compare the effects of market volatilities on Lindblad Expeditions and Carnival 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 Lindblad Expeditions with a short position of Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindblad Expeditions and Carnival.

Diversification Opportunities for Lindblad Expeditions and Carnival

0.64

Correlation Coefficient

Lindblad Expeditions  Carnival

Poor diversification

The 3 months correlation between Lindblad and Carnival is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lindblad Expeditions Holdings and Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival and Lindblad Expeditions 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 Lindblad Expeditions Holdings are associated (or correlated) with Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival has no effect on the direction of Lindblad Expeditions i.e., Lindblad Expeditions and Carnival go up and down completely randomly.

Pair Corralation between Lindblad Expeditions and Carnival

Given the investment horizon of 90 days Lindblad Expeditions Holdings is expected to under-perform the Carnival. In addition to that, Lindblad Expeditions is 1.35 times more volatile than Carnival. It trades about -0.24 of its total potential returns per unit of risk. Carnival is currently generating about -0.24 per unit of volatility. If you would invest  1,703  in Carnival on January 26, 2024 and sell it today you would lose (202.00) from holding Carnival or give up 11.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Lindblad Expeditions Holdings  vs.  Carnival

Lindblad Expeditions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lindblad Expeditions Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Carnival

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carnival has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Carnival is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Lindblad Expeditions and Carnival

The main advantage of trading using opposite Lindblad Expeditions and Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindblad Expeditions position performs unexpectedly, Carnival 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 Carnival will offset losses from the drop in Carnival's long position.

The idea behind Lindblad Expeditions Holdings and Carnival 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.