Correlation Between Clave Indices and Marriott International

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

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

Diversification Opportunities for Clave Indices and Marriott International

-0.74

Correlation Coefficient

Clave Indices  Marriott International

Pay attention - limited upside

The 3 months correlation between Clave and Marriott is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Clave Indices De and Marriott International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott International and Clave Indices 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 Clave Indices De 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 Clave Indices i.e., Clave Indices and Marriott International go up and down completely randomly.

Pair Corralation between Clave Indices and Marriott International

Assuming the 90 days trading horizon Clave Indices De is expected to under-perform the Marriott International. In addition to that, Clave Indices is 1.02 times more volatile than Marriott International. It trades about -0.06 of its total potential returns per unit of risk. Marriott International is currently generating about 0.22 per unit of volatility. If you would invest  35,403  in Marriott International on October 8, 2024 and sell it today you would earn a total of  6,995  from holding Marriott International or generate 19.76% return on investment over 90 days.

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

Clave Indices De  vs.  Marriott International

Clave Indices De

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clave Indices De has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Clave Indices is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Marriott International

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marriott International are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Marriott International sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clave Indices and Marriott International

The main advantage of trading using opposite Clave Indices and Marriott International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clave Indices 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 Clave Indices De 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.