Correlation Between Viking Holdings and Carnival

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

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

Diversification Opportunities for Viking Holdings and Carnival

0.96

Correlation Coefficient

Viking Holdings  Carnival

Almost no diversification

The 3 months correlation between Viking and Carnival is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Viking Holdings and Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival and Viking Holdings 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 Viking Holdings are associated (or correlated) with Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival has no effect on the direction of Viking Holdings i.e., Viking Holdings and Carnival go up and down completely randomly.

Pair Corralation between Viking Holdings and Carnival

Considering the 90-day investment horizon Viking Holdings is expected to generate 1.28 times less return on investment than Carnival. But when comparing it to its historical volatility, Viking Holdings is 1.43 times less risky than Carnival. It trades about 0.35 of its potential returns per unit of risk. Carnival is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  1,634  in Carnival on September 1, 2024 and sell it today you would earn a total of  909.00  from holding Carnival or generate 55.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Viking Holdings  vs.  Carnival

Viking Holdings

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Viking Holdings are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Viking Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Carnival

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carnival are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Carnival disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Viking Holdings and Carnival

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

The idea behind Viking Holdings and Carnival 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.