Correlation Between Biocardia and MARRIOTT

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

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

Diversification Opportunities for Biocardia and MARRIOTT

0.48

Correlation Coefficient

Biocardia  MARRIOTT

Very weak diversification

The 3 months correlation between Biocardia and MARRIOTT is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Biocardia and MARRIOTT INTL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARRIOTT INTL INC and Biocardia 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 Biocardia are associated (or correlated) with MARRIOTT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARRIOTT INTL INC has no effect on the direction of Biocardia i.e., Biocardia and MARRIOTT go up and down completely randomly.

Pair Corralation between Biocardia and MARRIOTT

Given the investment horizon of 90 days Biocardia is expected to generate 1.43 times more return on investment than MARRIOTT. However, Biocardia is 1.43 times more volatile than MARRIOTT INTL INC. It trades about -0.04 of its potential returns per unit of risk. MARRIOTT INTL INC is currently generating about -0.09 per unit of risk. If you would invest  241.00  in Biocardia on September 24, 2024 and sell it today you would lose (44.00) from holding Biocardia or give up 18.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	56.92%
Values	Daily Returns

Biocardia  vs.  MARRIOTT INTL INC

Biocardia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biocardia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

MARRIOTT INTL INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MARRIOTT INTL INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for MARRIOTT INTL INC investors.

Pair Trading with Biocardia and MARRIOTT

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

The idea behind Biocardia and MARRIOTT INTL INC 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.