Correlation Between Marriott International and AutoZone,

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

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

Diversification Opportunities for Marriott International and AutoZone,

0.91

Correlation Coefficient

Marriott International  AutoZone,

Almost no diversification

The 3 months correlation between Marriott and AutoZone, is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Marriott International and AutoZone, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone, and Marriott International 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 Marriott International are associated (or correlated) with AutoZone,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoZone, has no effect on the direction of Marriott International i.e., Marriott International and AutoZone, go up and down completely randomly.

Pair Corralation between Marriott International and AutoZone,

Assuming the 90 days trading horizon Marriott International is expected to generate 0.97 times more return on investment than AutoZone,. However, Marriott International is 1.03 times less risky than AutoZone,. It trades about 0.22 of its potential returns per unit of risk. AutoZone, is currently generating about 0.19 per unit of risk. If you would invest  35,403  in Marriott International on October 8, 2024 and sell it today you would earn a total of  6,995  from holding Marriott International or generate 19.76% return on investment over 90 days.

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

Marriott International  vs.  AutoZone,

Marriott International

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marriott International are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Marriott International sustained solid returns over the last few months and may actually be approaching a breakup point.

AutoZone,

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AutoZone, are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, AutoZone, sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marriott International and AutoZone,

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

The idea behind Marriott International and AutoZone, 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.