Correlation Between Marriott International and LendingTree

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

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

Diversification Opportunities for Marriott International and LendingTree

-0.78

Correlation Coefficient

Marriott International  LendingTree

Pay attention - limited upside

The 3 months correlation between Marriott and LendingTree is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Marriott International and LendingTree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LendingTree 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 LendingTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LendingTree has no effect on the direction of Marriott International i.e., Marriott International and LendingTree go up and down completely randomly.

Pair Corralation between Marriott International and LendingTree

Assuming the 90 days horizon Marriott International is expected to generate 0.4 times more return on investment than LendingTree. However, Marriott International is 2.48 times less risky than LendingTree. It trades about -0.03 of its potential returns per unit of risk. LendingTree is currently generating about -0.11 per unit of risk. If you would invest  27,005  in Marriott International on September 23, 2024 and sell it today you would lose (295.00) from holding Marriott International or give up 1.09% of portfolio value over 90 days.

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

Marriott International  vs.  LendingTree

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 nearly fragile basic indicators, Marriott International reported solid returns over the last few months and may actually be approaching a breakup point.

LendingTree

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LendingTree 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Marriott International and LendingTree

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

The idea behind Marriott International and LendingTree 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.