Correlation Between Carnival Plc and SeaWorld Entertainment

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

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

Diversification Opportunities for Carnival Plc and SeaWorld Entertainment

0.0

Correlation Coefficient

Carnival Plc  SeaWorld Entertainment

Pay attention - limited upside

The 3 months correlation between Carnival and SeaWorld is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Carnival Plc ADS and SeaWorld Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SeaWorld Entertainment and Carnival Plc 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 Plc ADS are associated (or correlated) with SeaWorld Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SeaWorld Entertainment has no effect on the direction of Carnival Plc i.e., Carnival Plc and SeaWorld Entertainment go up and down completely randomly.

Pair Corralation between Carnival Plc and SeaWorld Entertainment

If you would invest (100.00) in SeaWorld Entertainment on December 28, 2024 and sell it today you would earn a total of  100.00  from holding SeaWorld Entertainment or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Carnival Plc ADS  vs.  SeaWorld Entertainment

Carnival Plc ADS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carnival Plc ADS 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 quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

SeaWorld Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days SeaWorld Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SeaWorld Entertainment is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Carnival Plc and SeaWorld Entertainment

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

The idea behind Carnival Plc ADS and SeaWorld Entertainment 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.