Correlation Between Airbnb and Mundial SA

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

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

Diversification Opportunities for Airbnb and Mundial SA

0.51

Correlation Coefficient

Airbnb  Mundial SA

Very weak diversification

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

Pair Corralation between Airbnb and Mundial SA

Assuming the 90 days trading horizon Airbnb Inc is expected to under-perform the Mundial SA. But the stock apears to be less risky and, when comparing its historical volatility, Airbnb Inc is 1.27 times less risky than Mundial SA. The stock trades about 0.0 of its potential returns per unit of risk. The Mundial SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,330  in Mundial SA on September 29, 2024 and sell it today you would earn a total of  280.00  from holding Mundial SA or generate 21.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

Airbnb Inc  vs.  Mundial SA

Airbnb Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Airbnb Inc are ranked lower than 9 (%) 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.

Mundial SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mundial SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mundial SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Airbnb and Mundial SA

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

The idea behind Airbnb Inc and Mundial SA 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.