Correlation Between Carnival and Coinbase Global

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Can any of the company-specific risk be diversified away by investing in both Carnival and Coinbase Global 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 and Coinbase Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carnival and Coinbase Global, you can compare the effects of market volatilities on Carnival and Coinbase Global 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 with a short position of Coinbase Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival and Coinbase Global.

Diversification Opportunities for Carnival and Coinbase Global

-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between Carnival and Coinbase is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Carnival and Coinbase Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coinbase Global and Carnival 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 are associated (or correlated) with Coinbase Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coinbase Global has no effect on the direction of Carnival i.e., Carnival and Coinbase Global go up and down completely randomly.

Pair Corralation between Carnival and Coinbase Global

Considering the 90-day investment horizon Carnival is expected to generate 0.75 times more return on investment than Coinbase Global. However, Carnival is 1.34 times less risky than Coinbase Global. It trades about 0.14 of its potential returns per unit of risk. Coinbase Global is currently generating about -0.07 per unit of risk. If you would invest  883.00  in Carnival on September 4, 2022 and sell it today you would earn a total of  117.00  from holding Carnival or generate 13.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Carnival  vs.  Coinbase Global

 Performance (%) 
       Timeline  
Carnival 
Carnival Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Carnival are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Carnival revealed solid returns over the last few months and may actually be approaching a breakup point.

Carnival Price Channel

Coinbase Global 
Coinbase Performance
0 of 100
Over the last 90 days Coinbase Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in January 2023. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Coinbase Price Channel

Carnival and Coinbase Global Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Carnival and Coinbase Global

The main advantage of trading using opposite Carnival and Coinbase Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnival position performs unexpectedly, Coinbase Global 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 Coinbase Global will offset losses from the drop in Coinbase Global's long position.
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The idea behind Carnival and Coinbase Global 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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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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