Correlation Between Expedia and Sonder Holdings

Can any of the company-specific risk be diversified away by investing in both Expedia and Sonder 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 Sonder 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 Sonder Holdings, you can compare the effects of market volatilities on Expedia and Sonder 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 Sonder Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expedia and Sonder Holdings.

Diversification Opportunities for Expedia and Sonder Holdings

-0.05

Correlation Coefficient

Expedia  Sonder Holdings

Good diversification

The 3 months correlation between Expedia and Sonder is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Expedia Group and Sonder Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonder 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 Sonder Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonder Holdings has no effect on the direction of Expedia i.e., Expedia and Sonder Holdings go up and down completely randomly.

Pair Corralation between Expedia and Sonder Holdings

Given the investment horizon of 90 days Expedia Group is expected to under-perform the Sonder Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Expedia Group is 4.52 times less risky than Sonder Holdings. The stock trades about -0.04 of its potential returns per unit of risk. The Sonder Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.62  in Sonder Holdings on December 29, 2024 and sell it today you would earn a total of  0.13  from holding Sonder Holdings or generate 20.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.8%
Values	Daily Returns

Expedia Group  vs.  Sonder Holdings

Expedia Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Expedia Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Sonder Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sonder Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Sonder Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Expedia and Sonder Holdings

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

The idea behind Expedia Group and Sonder 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.