Correlation Between Lands End and Expedia

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

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

Diversification Opportunities for Lands End and Expedia

-0.52

Correlation Coefficient

Lands End  Expedia

Excellent diversification

The 3 months correlation between Lands and Expedia is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Lands End and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia Group and Lands End 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 Lands End 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 Lands End i.e., Lands End and Expedia go up and down completely randomly.

Pair Corralation between Lands End and Expedia

Allowing for the 90-day total investment horizon Lands End is expected to generate 1.04 times more return on investment than Expedia. However, Lands End is 1.04 times more volatile than Expedia Group. It trades about 0.31 of its potential returns per unit of risk. Expedia Group is currently generating about -0.18 per unit of risk. If you would invest  1,107  in Lands End on February 8, 2024 and sell it today you would earn a total of  306.00  from holding Lands End or generate 27.64% return on investment over 90 days.

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

Lands End  vs.  Expedia Group

Lands End

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lands End are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Lands End exhibited solid returns over the last few months and may actually be approaching a breakup point.

Expedia Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Expedia Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Lands End and Expedia

The main advantage of trading using opposite Lands End and Expedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lands End 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 Lands End 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.