Correlation Between Expedia and Mondee Holdings

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

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

Diversification Opportunities for Expedia and Mondee Holdings

-0.41

Correlation Coefficient

Expedia  Mondee Holdings

Very good diversification

The 3 months correlation between Expedia and Mondee is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Expedia Group and Mondee Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondee Holdings and Expedia 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 Expedia Group are associated (or correlated) with Mondee Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondee Holdings has no effect on the direction of Expedia i.e., Expedia and Mondee Holdings go up and down completely randomly.

Pair Corralation between Expedia and Mondee Holdings

Given the investment horizon of 90 days Expedia Group is expected to generate 0.34 times more return on investment than Mondee Holdings. However, Expedia Group is 2.95 times less risky than Mondee Holdings. It trades about 0.06 of its potential returns per unit of risk. Mondee Holdings is currently generating about -0.13 per unit of risk. If you would invest  11,135  in Expedia Group on October 3, 2024 and sell it today you would earn a total of  7,498  from holding Expedia Group or generate 67.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.63%
Values	Daily Returns

Expedia Group  vs.  Mondee Holdings

Expedia Group

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Expedia Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Expedia exhibited solid returns over the last few months and may actually be approaching a breakup point.

Mondee Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mondee Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Expedia and Mondee Holdings

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

The idea behind Expedia Group and Mondee Holdings 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.