Royal Caribbean Stock – Is Royal Caribbean Stock Poised To Rise After The Recent Decline?

Royal Caribbean Cruises stock (NYSE:RCL) has declined by around 8% since mid-March, trading at levels of around $87 per share. The decline comes as the company continues to push back its sailing timeline from the United States, with the U.S. Centers for Disease Control rejecting cruise companies requests to resume operations in July. That said, the stock remains up by about 22% year-to-date, driven by improving vaccine coverage in the U.S. and moderation in Covid-19 infection rates.  So will RCL stock continue its recent downward trajectory over the coming weeks and months, or is a rally looking more likely now?

According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last twenty years, returns for RCL stock average close to 3% in the next month (21 trading days) after experiencing an 8% decline over the last 10 trading days. The stock is also likely to marginally outperform the S&P 500 over the next month, with an expected return that would be 0.5% higher compared to the S&P 500.

But how would these numbers change if you are interested in holding RCL stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test RCL stock chances of a rise after a fall and vice-versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF RCL stock moved by -5% over 5 trading days, THEN over the next 21 trading days then RCL stock moves an average of 4.2%, which implies an excess return of 1.9% compared to the S&P500.

More importantly, there is a 63.6% probability of a positive return over the next 21 trading days and 54.4% percent probability of a positive excess return.

Some Fun Scenarios, FAQs & Making Sense of Royal Caribbean Cruises Stock Movements:

Question 1: Is the average return for Royal Caribbean Cruises stock higher after a drop?

Answer:

Consider two situations,

Case 1: Royal Caribbean Cruises stock drops by -5% or more in a week

Case 2: Royal Caribbean Cruises stock rises by 5% or more in a week

Is the average return for Royal Caribbean Cruises stock higher over the subsequent month after Case 1 or Case 2?

RCL stock fares better after Case 1, with an average return of 4.2% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 1% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Royal Caribbean Cruises stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold Royal Caribbean Cruises stock, the expectation is over time the near term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For RCL stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

RCL’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

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It’s pretty powerful to test the trend for yourself for Royal Caribbean Cruises stock by changing the inputs in the charts above.

While RCL Stock may have moved, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how the stock valuation for Valvoline vs. Atlas Air Worldwide Holdings shows a disconnect with their relative operational growth. You can find many such discontinuous pairs here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.