Correlation Between FT Cboe and BOOKING

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

By analyzing existing cross correlation between FT Cboe Vest and BOOKING HOLDINGS INC, you can compare the effects of market volatilities on FT Cboe and BOOKING 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 FT Cboe with a short position of BOOKING. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Cboe and BOOKING.

Diversification Opportunities for FT Cboe and BOOKING

-0.6

Correlation Coefficient

FT Cboe  BOOKING

Excellent diversification

The 3 months correlation between BUFQ and BOOKING is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and BOOKING HOLDINGS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOOKING HOLDINGS INC and FT Cboe 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 FT Cboe Vest are associated (or correlated) with BOOKING. 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 INC has no effect on the direction of FT Cboe i.e., FT Cboe and BOOKING go up and down completely randomly.

Pair Corralation between FT Cboe and BOOKING

Given the investment horizon of 90 days FT Cboe Vest is expected to generate 0.72 times more return on investment than BOOKING. However, FT Cboe Vest is 1.4 times less risky than BOOKING. It trades about 0.13 of its potential returns per unit of risk. BOOKING HOLDINGS INC is currently generating about -0.24 per unit of risk. If you would invest  3,122  in FT Cboe Vest on September 24, 2024 and sell it today you would earn a total of  36.00  from holding FT Cboe Vest or generate 1.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

FT Cboe Vest  vs.  BOOKING HOLDINGS INC

FT Cboe Vest

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FT Cboe Vest are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, FT Cboe is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

BOOKING HOLDINGS INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BOOKING HOLDINGS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BOOKING is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FT Cboe and BOOKING

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

The idea behind FT Cboe Vest and BOOKING HOLDINGS 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.