Correlation Between Life Time and MARRIOTT

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

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

Diversification Opportunities for Life Time and MARRIOTT

0.48

Correlation Coefficient

Life Time  MARRIOTT

Very weak diversification

The 3 months correlation between Life and MARRIOTT is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group 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 Life Time 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 Life Time Group 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 Life Time i.e., Life Time and MARRIOTT go up and down completely randomly.

Pair Corralation between Life Time and MARRIOTT

Considering the 90-day investment horizon Life Time Group is expected to under-perform the MARRIOTT. In addition to that, Life Time is 2.41 times more volatile than MARRIOTT INTL INC. It trades about -0.27 of its total potential returns per unit of risk. MARRIOTT INTL INC is currently generating about -0.12 per unit of volatility. If you would invest  9,465  in MARRIOTT INTL INC on September 26, 2024 and sell it today you would lose (120.00) from holding MARRIOTT INTL INC or give up 1.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	66.67%
Values	Daily Returns

Life Time Group  vs.  MARRIOTT INTL INC

Life Time Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Life Time Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

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 latest weak 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 INTL INC investors.

Pair Trading with Life Time and MARRIOTT

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

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.