Correlation Between Fast Retailing and Marriott International

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

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

Diversification Opportunities for Fast Retailing and Marriott International

0.64

Correlation Coefficient

Fast Retailing  Marriott International

Poor diversification

The 3 months correlation between Fast and Marriott is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Marriott International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott International and Fast Retailing 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 Fast Retailing Co 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 Fast Retailing i.e., Fast Retailing and Marriott International go up and down completely randomly.

Pair Corralation between Fast Retailing and Marriott International

Assuming the 90 days trading horizon Fast Retailing Co is expected to generate 0.84 times more return on investment than Marriott International. However, Fast Retailing Co is 1.19 times less risky than Marriott International. It trades about -0.13 of its potential returns per unit of risk. Marriott International is currently generating about -0.18 per unit of risk. If you would invest  32,114  in Fast Retailing Co on December 22, 2024 and sell it today you would lose (4,284) from holding Fast Retailing Co or give up 13.34% of portfolio value over 90 days.

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

Fast Retailing Co  vs.  Marriott International

Fast Retailing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fast Retailing Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Marriott International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marriott International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Fast Retailing and Marriott International

The main advantage of trading using opposite Fast Retailing and Marriott International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing 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 Fast Retailing Co 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.