Correlation Between SHIMANO INC and Expedia

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

By analyzing existing cross correlation between SHIMANO INC UNSPADR10 and Expedia Group, you can compare the effects of market volatilities on SHIMANO INC and Expedia 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 SHIMANO INC with a short position of Expedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIMANO INC and Expedia.

Diversification Opportunities for SHIMANO INC and Expedia

-0.91

Correlation Coefficient

SHIMANO INC  Expedia

Pay attention - limited upside

The 3 months correlation between SHIMANO and Expedia is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding SHIMANO INC UNSPADR10 and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia Group and SHIMANO INC 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 SHIMANO INC UNSPADR10 are associated (or correlated) with Expedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expedia Group has no effect on the direction of SHIMANO INC i.e., SHIMANO INC and Expedia go up and down completely randomly.

Pair Corralation between SHIMANO INC and Expedia

Assuming the 90 days trading horizon SHIMANO INC UNSPADR10 is expected to under-perform the Expedia. In addition to that, SHIMANO INC is 1.26 times more volatile than Expedia Group. It trades about -0.11 of its total potential returns per unit of risk. Expedia Group is currently generating about 0.25 per unit of volatility. If you would invest  12,600  in Expedia Group on September 2, 2024 and sell it today you would earn a total of  5,054  from holding Expedia Group or generate 40.11% return on investment over 90 days.

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

SHIMANO INC UNSPADR10  vs.  Expedia Group

SHIMANO INC UNSPADR10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHIMANO INC UNSPADR10 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 primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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. Despite nearly fragile basic indicators, Expedia reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SHIMANO INC and Expedia

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

The idea behind SHIMANO INC UNSPADR10 and Expedia Group 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.