Correlation Between Expedia and Booking Holdings

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Expedia and Booking Holdings 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 Expedia and Booking Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Expedia Group and Booking Holdings, you can compare the effects of market volatilities on Expedia and Booking Holdings 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 Expedia with a short position of Booking Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expedia and Booking Holdings.

Diversification Opportunities for Expedia and Booking Holdings

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Expedia and Booking is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Expedia Group and Booking Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booking Holdings and Expedia 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 Expedia Group are associated (or correlated) with Booking Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booking Holdings has no effect on the direction of Expedia i.e., Expedia and Booking Holdings go up and down completely randomly.

Pair Corralation between Expedia and Booking Holdings

Given the investment horizon of 90 days Expedia is expected to generate 1.04 times less return on investment than Booking Holdings. In addition to that, Expedia is 1.22 times more volatile than Booking Holdings. It trades about 0.31 of its total potential returns per unit of risk. Booking Holdings is currently generating about 0.4 per unit of volatility. If you would invest  380,496  in Booking Holdings on August 31, 2024 and sell it today you would earn a total of  141,819  from holding Booking Holdings or generate 37.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Expedia Group  vs.  Booking Holdings

 Performance 
       Timeline  
Expedia Group 

Risk-Adjusted Performance

24 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Expedia Group are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Expedia exhibited solid returns over the last few months and may actually be approaching a breakup point.
Booking Holdings 

Risk-Adjusted Performance

31 of 100

 
Weak
 
Strong
Very Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Booking Holdings are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Booking Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Expedia and Booking Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Expedia and Booking Holdings

The main advantage of trading using opposite Expedia and Booking Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expedia position performs unexpectedly, Booking Holdings 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 Booking Holdings will offset losses from the drop in Booking Holdings' long position.
The idea behind Expedia Group and Booking Holdings 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.
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

Other Complementary Tools

Fundamental Analysis
View fundamental data based on most recent published financial statements
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Odds Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA