Royal Caribbean stock (NYSE:RCL) has declined by about 4% over the last week and remains down by about 9% over the last month. There have been a couple of factors driving the movement. In late June, Royal Caribbean’s Celebrity Edge set sail from Fort Lauderdale, Florida becoming the first cruise out of a U.S. port with paid passengers since the Covid-19 pandemic began. While this means that the company can start generating revenue from its U.S. cruises after nearly 15 months, investors are likely concerned about a couple of factors, including the emergence of more infectious Covid variants, which could hinder the pace of the cruising recovery, as well as rising oil prices and the current labor shortages, which could impact costs as the company looks to get back on its feet.
So will Royal Caribbean stock continue to trend lower over the coming weeks and months, or are gains looking more likely? According to the Trefis Machine Learning Engine, which identifies trends in a company’s historical stock price data, returns for Royal Caribbean stock average 3% in the next month (21 trading days) period after experiencing a -4% drop over the last five trading days. The stock is also likely to outperform the S&P 500 over the next month, with an expected return that would be 1.5% higher compared to the S&P 500.
But how would these numbers change if you are interested in holding Royal Caribbean 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 RCL stock moves an average of 4.3%, with a 64.3% probability of a positive return over this period.
Also, given a -5% movement for the stock over 5 trading days, it has historically witnessed an excess return of 1.8% compared to the S&P500 over the next 21 trading days, with a 52.1% percent probability of a positive excess return
Some Fun Scenarios, FAQs & Making Sense of RCL Stock Movements:
Question 1: Is the average return for RCL stock higher after a drop?
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?
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?
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: