Correlation Between Pure Storage and Carnival Plc

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

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

Diversification Opportunities for Pure Storage and Carnival Plc

0.88

Correlation Coefficient

Pure Storage  Carnival Plc

Very poor diversification

The 3 months correlation between Pure and Carnival is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage and Carnival plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival plc and Pure Storage 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 Pure Storage are associated (or correlated) with Carnival Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival plc has no effect on the direction of Pure Storage i.e., Pure Storage and Carnival Plc go up and down completely randomly.

Pair Corralation between Pure Storage and Carnival Plc

Assuming the 90 days horizon Pure Storage is expected to under-perform the Carnival Plc. In addition to that, Pure Storage is 1.17 times more volatile than Carnival plc. It trades about -0.15 of its total potential returns per unit of risk. Carnival plc is currently generating about -0.12 per unit of volatility. If you would invest  2,461  in Carnival plc on December 21, 2024 and sell it today you would lose (524.00) from holding Carnival plc or give up 21.29% of portfolio value over 90 days.

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

Pure Storage  vs.  Carnival plc

Pure Storage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pure Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Carnival plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carnival plc 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 fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Pure Storage and Carnival Plc

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

The idea behind Pure Storage and Carnival plc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.