Correlation Between Thunder Bridge and BOOKING

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

By analyzing existing cross correlation between Thunder Bridge Capital and BOOKING HOLDINGS INC, you can compare the effects of market volatilities on Thunder Bridge and BOOKING 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 Thunder Bridge with a short position of BOOKING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thunder Bridge and BOOKING.

Diversification Opportunities for Thunder Bridge and BOOKING

-0.32

Correlation Coefficient

Thunder Bridge  BOOKING

Very good diversification

The 3 months correlation between Thunder and BOOKING is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Thunder Bridge Capital and BOOKING HOLDINGS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOOKING HOLDINGS INC and Thunder Bridge 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 Thunder Bridge Capital are associated (or correlated) with BOOKING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOOKING HOLDINGS INC has no effect on the direction of Thunder Bridge i.e., Thunder Bridge and BOOKING go up and down completely randomly.

Pair Corralation between Thunder Bridge and BOOKING

If you would invest  10,012  in BOOKING HOLDINGS INC on October 13, 2024 and sell it today you would earn a total of  18.00  from holding BOOKING HOLDINGS INC or generate 0.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Thunder Bridge Capital  vs.  BOOKING HOLDINGS INC

Thunder Bridge Capital

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Thunder Bridge Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively uncertain fundamental indicators, Thunder Bridge reported solid returns over the last few months and may actually be approaching a breakup point.

BOOKING HOLDINGS INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BOOKING HOLDINGS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BOOKING is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thunder Bridge and BOOKING

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

The idea behind Thunder Bridge Capital and BOOKING HOLDINGS INC 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.