Correlation Between Apple and Marriott International

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

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

Diversification Opportunities for Apple and Marriott International

0.77

Correlation Coefficient

Apple  Marriott International

Poor diversification

The 3 months correlation between Apple and Marriott is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Marriott International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott International and Apple 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 Apple Inc are associated (or correlated) with Marriott International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marriott International has no effect on the direction of Apple i.e., Apple and Marriott International go up and down completely randomly.

Pair Corralation between Apple and Marriott International

Assuming the 90 days trading horizon Apple Inc is expected to generate 1.25 times more return on investment than Marriott International. However, Apple is 1.25 times more volatile than Marriott International. It trades about 0.02 of its potential returns per unit of risk. Marriott International is currently generating about -0.26 per unit of risk. If you would invest  23,335  in Apple Inc on October 10, 2024 and sell it today you would earn a total of  60.00  from holding Apple Inc or generate 0.26% return on investment over 90 days.

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

Apple Inc  vs.  Marriott International

Apple Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Marriott International

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marriott International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Marriott International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Apple and Marriott International

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

The idea behind Apple Inc and Marriott International 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.