Correlation Between Carnival and Hilton Grand

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

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

Diversification Opportunities for Carnival and Hilton Grand

0.47

Correlation Coefficient

Carnival  Hilton Grand

Very weak diversification

The 3 months correlation between Carnival and Hilton is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Carnival and Hilton Grand Vacations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Grand Vacations and Carnival 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 Carnival are associated (or correlated) with Hilton Grand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Grand Vacations has no effect on the direction of Carnival i.e., Carnival and Hilton Grand go up and down completely randomly.

Pair Corralation between Carnival and Hilton Grand

Considering the 90-day investment horizon Carnival is expected to generate 1.53 times more return on investment than Hilton Grand. However, Carnival is 1.53 times more volatile than Hilton Grand Vacations. It trades about -0.02 of its potential returns per unit of risk. Hilton Grand Vacations is currently generating about -0.04 per unit of risk. If you would invest  2,543  in Carnival on November 29, 2024 and sell it today you would lose (131.00) from holding Carnival or give up 5.15% of portfolio value over 90 days.

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

Carnival  vs.  Hilton Grand Vacations

Carnival

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carnival has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Carnival is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Hilton Grand Vacations

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hilton Grand Vacations has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Hilton Grand is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Carnival and Hilton Grand

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

The idea behind Carnival and Hilton Grand Vacations 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.