Correlation Between United States and Airbnb

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

By analyzing existing cross correlation between United States Steel and Airbnb Inc, you can compare the effects of market volatilities on United States and Airbnb 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 United States with a short position of Airbnb. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Airbnb.

Diversification Opportunities for United States and Airbnb

0.51

Correlation Coefficient

United States  Airbnb

Very weak diversification

The 3 months correlation between United and Airbnb is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Airbnb Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbnb Inc and United States 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 United States Steel are associated (or correlated) with Airbnb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbnb Inc has no effect on the direction of United States i.e., United States and Airbnb go up and down completely randomly.

Pair Corralation between United States and Airbnb

Assuming the 90 days trading horizon United States is expected to generate 1.26 times less return on investment than Airbnb. In addition to that, United States is 1.34 times more volatile than Airbnb Inc. It trades about 0.04 of its total potential returns per unit of risk. Airbnb Inc is currently generating about 0.06 per unit of volatility. If you would invest  2,322  in Airbnb Inc on September 24, 2024 and sell it today you would earn a total of  1,848  from holding Airbnb Inc or generate 79.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	92.73%
Values	Daily Returns

United States Steel  vs.  Airbnb Inc

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Airbnb Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Airbnb Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Airbnb sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United States and Airbnb

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

The idea behind United States Steel and Airbnb Inc 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.