Correlation Between Marriott Vacations and Casio Computer

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

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

Diversification Opportunities for Marriott Vacations and Casio Computer

0.4

Correlation Coefficient

Marriott Vacations  Casio Computer

Very weak diversification

The 3 months correlation between Marriott and Casio is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Marriott Vacations Worldwide and Casio Computer CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casio Computer CoLtd and Marriott Vacations 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 Vacations Worldwide are associated (or correlated) with Casio Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casio Computer CoLtd has no effect on the direction of Marriott Vacations i.e., Marriott Vacations and Casio Computer go up and down completely randomly.

Pair Corralation between Marriott Vacations and Casio Computer

Assuming the 90 days horizon Marriott Vacations Worldwide is expected to under-perform the Casio Computer. In addition to that, Marriott Vacations is 2.06 times more volatile than Casio Computer CoLtd. It trades about -0.21 of its total potential returns per unit of risk. Casio Computer CoLtd is currently generating about -0.06 per unit of volatility. If you would invest  787.00  in Casio Computer CoLtd on December 21, 2024 and sell it today you would lose (37.00) from holding Casio Computer CoLtd or give up 4.7% of portfolio value over 90 days.

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

Marriott Vacations Worldwide  vs.  Casio Computer CoLtd

Marriott Vacations

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marriott Vacations Worldwide has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Casio Computer CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Casio Computer CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Casio Computer is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Marriott Vacations and Casio Computer

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

The idea behind Marriott Vacations Worldwide and Casio Computer CoLtd 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.