Correlation Between INDIKA ENERGY and Marriott Vacations

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

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

Diversification Opportunities for INDIKA ENERGY and Marriott Vacations

-0.85

Correlation Coefficient

INDIKA ENERGY  Marriott Vacations

Pay attention - limited upside

The 3 months correlation between INDIKA and Marriott is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding INDIKA ENERGY and Marriott Vacations Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott Vacations and INDIKA ENERGY 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 INDIKA ENERGY are associated (or correlated) with Marriott Vacations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marriott Vacations has no effect on the direction of INDIKA ENERGY i.e., INDIKA ENERGY and Marriott Vacations go up and down completely randomly.

Pair Corralation between INDIKA ENERGY and Marriott Vacations

Assuming the 90 days trading horizon INDIKA ENERGY is expected to generate 2.09 times more return on investment than Marriott Vacations. However, INDIKA ENERGY is 2.09 times more volatile than Marriott Vacations Worldwide. It trades about 0.05 of its potential returns per unit of risk. Marriott Vacations Worldwide is currently generating about -0.3 per unit of risk. If you would invest  7.50  in INDIKA ENERGY on October 9, 2024 and sell it today you would earn a total of  0.15  from holding INDIKA ENERGY or generate 2.0% return on investment over 90 days.

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

INDIKA ENERGY  vs.  Marriott Vacations Worldwide

INDIKA ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INDIKA ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Marriott Vacations

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marriott Vacations Worldwide are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Marriott Vacations reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INDIKA ENERGY and Marriott Vacations

The main advantage of trading using opposite INDIKA ENERGY and Marriott Vacations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDIKA ENERGY position performs unexpectedly, Marriott Vacations 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 Vacations will offset losses from the drop in Marriott Vacations' long position.

The idea behind INDIKA ENERGY and Marriott Vacations Worldwide 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.