Correlation Between Ishares Trust and MARRIOTT

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

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

Diversification Opportunities for Ishares Trust and MARRIOTT

-0.56

Correlation Coefficient

Ishares Trust  MARRIOTT

Excellent diversification

The 3 months correlation between Ishares and MARRIOTT is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Trust and MARRIOTT INTL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARRIOTT INTL INC and Ishares Trust 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 Ishares Trust 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 INTL INC has no effect on the direction of Ishares Trust i.e., Ishares Trust and MARRIOTT go up and down completely randomly.

Pair Corralation between Ishares Trust and MARRIOTT

Given the investment horizon of 90 days Ishares Trust is expected to generate 18.75 times less return on investment than MARRIOTT. But when comparing it to its historical volatility, Ishares Trust is 35.55 times less risky than MARRIOTT. It trades about 0.08 of its potential returns per unit of risk. MARRIOTT INTL INC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,705  in MARRIOTT INTL INC on September 24, 2024 and sell it today you would lose (9.00) from holding MARRIOTT INTL INC or give up 0.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.36%
Values	Daily Returns

Ishares Trust   vs.  MARRIOTT INTL INC

Ishares Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ishares Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Ishares Trust may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MARRIOTT INTL INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MARRIOTT INTL 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 Ishares Trust and MARRIOTT

The main advantage of trading using opposite Ishares Trust and MARRIOTT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Trust 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 Ishares Trust and MARRIOTT INTL 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.