Correlation Between Booking Holdings and Viridian Therapeutics

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

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

Diversification Opportunities for Booking Holdings and Viridian Therapeutics

-0.5

Correlation Coefficient

Booking Holdings  Viridian Therapeutics

Very good diversification

The 3 months correlation between Booking and Viridian is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Booking Holdings and Viridian Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viridian Therapeutics and Booking Holdings 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 Booking Holdings are associated (or correlated) with Viridian Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viridian Therapeutics has no effect on the direction of Booking Holdings i.e., Booking Holdings and Viridian Therapeutics go up and down completely randomly.

Pair Corralation between Booking Holdings and Viridian Therapeutics

Assuming the 90 days trading horizon Booking Holdings is expected to generate 1.51 times more return on investment than Viridian Therapeutics. However, Booking Holdings is 1.51 times more volatile than Viridian Therapeutics. It trades about 0.05 of its potential returns per unit of risk. Viridian Therapeutics is currently generating about 0.0 per unit of risk. If you would invest  200,760  in Booking Holdings on September 23, 2024 and sell it today you would earn a total of  306,740  from holding Booking Holdings or generate 152.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.1%
Values	Daily Returns

Booking Holdings  vs.  Viridian Therapeutics

Booking Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Booking Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Booking Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Viridian Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viridian Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Viridian Therapeutics is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Booking Holdings and Viridian Therapeutics

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

The idea behind Booking Holdings and Viridian Therapeutics 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 Global Correlations module to find global opportunities by holding instruments from different markets.