Correlation Between Travel Leisure and Booking Holdings

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

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

Diversification Opportunities for Travel Leisure and Booking Holdings

0.65

Correlation Coefficient

Travel Leisure  Booking Holdings

Poor diversification

The 3 months correlation between Travel and Booking is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Travel Leisure Co and Booking Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booking Holdings and Travel Leisure 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 Travel Leisure Co are associated (or correlated) with Booking Holdings. 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 has no effect on the direction of Travel Leisure i.e., Travel Leisure and Booking Holdings go up and down completely randomly.

Pair Corralation between Travel Leisure and Booking Holdings

Considering the 90-day investment horizon Travel Leisure Co is expected to generate 1.57 times more return on investment than Booking Holdings. However, Travel Leisure is 1.57 times more volatile than Booking Holdings. It trades about 0.22 of its potential returns per unit of risk. Booking Holdings is currently generating about 0.08 per unit of risk. If you would invest  4,630  in Travel Leisure Co on May 7, 2025 and sell it today you would earn a total of  1,311  from holding Travel Leisure Co or generate 28.32% return on investment over 90 days.

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

Travel Leisure Co  vs.  Booking Holdings

Travel Leisure

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Travel Leisure Co are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Travel Leisure disclosed solid returns over the last few months and may actually be approaching a breakup point.

Booking Holdings

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Booking Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Booking Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Travel Leisure and Booking Holdings

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

The idea behind Travel Leisure Co and Booking 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..