Correlation Between Marriott International and Soho House

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

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

Diversification Opportunities for Marriott International and Soho House

-0.09

Correlation Coefficient

Marriott International  Soho House

Good diversification

The 3 months correlation between Marriott and Soho is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Marriott International and Soho House Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soho House 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 Soho House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soho House has no effect on the direction of Marriott International i.e., Marriott International and Soho House go up and down completely randomly.

Pair Corralation between Marriott International and Soho House

Considering the 90-day investment horizon Marriott International is expected to under-perform the Soho House. But the stock apears to be less risky and, when comparing its historical volatility, Marriott International is 2.05 times less risky than Soho House. The stock trades about -0.13 of its potential returns per unit of risk. The Soho House Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  749.00  in Soho House Co on October 22, 2024 and sell it today you would earn a total of  4.00  from holding Soho House Co or generate 0.53% return on investment over 90 days.

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

Marriott International  vs.  Soho House Co

Marriott International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marriott International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Marriott International is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Soho House

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Soho House Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, Soho House displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marriott International and Soho House

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

The idea behind Marriott International and Soho House Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.