Correlation Between Broadstone Net and MARRIOTT

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

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

Diversification Opportunities for Broadstone Net and MARRIOTT

0.6

Correlation Coefficient

Broadstone Net  MARRIOTT

Poor diversification

The 3 months correlation between Broadstone and MARRIOTT is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Broadstone Net Lease 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 Broadstone Net 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 Broadstone Net Lease 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 Broadstone Net i.e., Broadstone Net and MARRIOTT go up and down completely randomly.

Pair Corralation between Broadstone Net and MARRIOTT

Considering the 90-day investment horizon Broadstone Net Lease is expected to under-perform the MARRIOTT. In addition to that, Broadstone Net is 2.36 times more volatile than MARRIOTT INTL INC. It trades about -0.37 of its total potential returns per unit of risk. MARRIOTT INTL INC is currently generating about -0.2 per unit of volatility. If you would invest  9,794  in MARRIOTT INTL INC on October 13, 2024 and sell it today you would lose (215.00) from holding MARRIOTT INTL INC or give up 2.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.48%
Values	Daily Returns

Broadstone Net Lease  vs.  MARRIOTT INTL INC

Broadstone Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadstone Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional 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 somewhat strong basic indicators, MARRIOTT is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Broadstone Net and MARRIOTT

The main advantage of trading using opposite Broadstone Net and MARRIOTT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadstone Net 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 Broadstone Net Lease 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.

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 the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.