Correlation Between Carnival Plc and Inspirato

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

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

Diversification Opportunities for Carnival Plc and Inspirato

-0.68

Correlation Coefficient

Carnival Plc  Inspirato

Excellent diversification

The 3 months correlation between Carnival and Inspirato is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Carnival Plc ADS and Inspirato in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspirato and Carnival Plc 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 Carnival Plc ADS are associated (or correlated) with Inspirato. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspirato has no effect on the direction of Carnival Plc i.e., Carnival Plc and Inspirato go up and down completely randomly.

Pair Corralation between Carnival Plc and Inspirato

Considering the 90-day investment horizon Carnival Plc is expected to generate 1.32 times less return on investment than Inspirato. But when comparing it to its historical volatility, Carnival Plc ADS is 3.52 times less risky than Inspirato. It trades about 0.11 of its potential returns per unit of risk. Inspirato is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  355.00  in Inspirato on September 29, 2024 and sell it today you would earn a total of  0.00  from holding Inspirato or generate 0.0% return on investment over 90 days.

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

Carnival Plc ADS  vs.  Inspirato

Carnival Plc ADS

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carnival Plc ADS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Carnival Plc disclosed solid returns over the last few months and may actually be approaching a breakup point.

Inspirato

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inspirato 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 healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Carnival Plc and Inspirato

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

The idea behind Carnival Plc ADS and Inspirato 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.