Correlation Between Freedom Holding and MARRIOTT

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

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

Diversification Opportunities for Freedom Holding and MARRIOTT

-0.49

Correlation Coefficient

Freedom Holding  MARRIOTT

Very good diversification

The 3 months correlation between Freedom and MARRIOTT is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and MARRIOTT INTERNATIONAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARRIOTT INTERNATIONAL and Freedom Holding 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 Freedom Holding Corp 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 Freedom Holding i.e., Freedom Holding and MARRIOTT go up and down completely randomly.

Pair Corralation between Freedom Holding and MARRIOTT

Given the investment horizon of 90 days Freedom Holding Corp is expected to generate 2.9 times more return on investment than MARRIOTT. However, Freedom Holding is 2.9 times more volatile than MARRIOTT INTERNATIONAL INC. It trades about 0.25 of its potential returns per unit of risk. MARRIOTT INTERNATIONAL INC is currently generating about -0.23 per unit of risk. If you would invest  11,957  in Freedom Holding Corp on October 4, 2024 and sell it today you would earn a total of  1,112  from holding Freedom Holding Corp or generate 9.3% return on investment over 90 days.

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

Freedom Holding Corp  vs.  MARRIOTT INTERNATIONAL INC

Freedom Holding Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Holding Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Freedom Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 somewhat strong basic indicators, MARRIOTT is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Freedom Holding and MARRIOTT

The main advantage of trading using opposite Freedom Holding and MARRIOTT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Holding 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 Freedom Holding Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.