Correlation Between CVW CleanTech and MARRIOTT

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

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

Diversification Opportunities for CVW CleanTech and MARRIOTT

0.22

Correlation Coefficient

CVW CleanTech  MARRIOTT

Modest diversification

The 3 months correlation between CVW and MARRIOTT is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and MARRIOTT INTERNATIONAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARRIOTT INTERNATIONAL and CVW CleanTech 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 CVW CleanTech 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 INTERNATIONAL has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and MARRIOTT go up and down completely randomly.

Pair Corralation between CVW CleanTech and MARRIOTT

Assuming the 90 days horizon CVW CleanTech is expected to generate 3.59 times more return on investment than MARRIOTT. However, CVW CleanTech is 3.59 times more volatile than MARRIOTT INTERNATIONAL INC. It trades about 0.1 of its potential returns per unit of risk. MARRIOTT INTERNATIONAL INC is currently generating about -0.29 per unit of risk. If you would invest  62.00  in CVW CleanTech on September 26, 2024 and sell it today you would earn a total of  3.00  from holding CVW CleanTech or generate 4.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

CVW CleanTech  vs.  MARRIOTT INTERNATIONAL INC

CVW CleanTech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVW CleanTech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, CVW CleanTech is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

MARRIOTT INTERNATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CVW CleanTech and MARRIOTT

The main advantage of trading using opposite CVW CleanTech and MARRIOTT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CleanTech 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 CVW CleanTech and MARRIOTT INTERNATIONAL 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.