Correlation Between Marcus and Vail Resorts

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

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

Diversification Opportunities for Marcus and Vail Resorts

0.51

Correlation Coefficient

Marcus  Vail Resorts

Very weak diversification

The 3 months correlation between Marcus and Vail is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Marcus and Vail Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vail Resorts and Marcus 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 Marcus are associated (or correlated) with Vail Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vail Resorts has no effect on the direction of Marcus i.e., Marcus and Vail Resorts go up and down completely randomly.

Pair Corralation between Marcus and Vail Resorts

Considering the 90-day investment horizon Marcus is expected to under-perform the Vail Resorts. But the stock apears to be less risky and, when comparing its historical volatility, Marcus is 1.39 times less risky than Vail Resorts. The stock trades about -0.03 of its potential returns per unit of risk. The Vail Resorts is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  18,117  in Vail Resorts on September 22, 2024 and sell it today you would earn a total of  315.00  from holding Vail Resorts or generate 1.74% return on investment over 90 days.

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

Marcus  vs.  Vail Resorts

Marcus

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marcus are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Marcus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Vail Resorts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vail Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Vail Resorts is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Marcus and Vail Resorts

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

The idea behind Marcus and Vail Resorts 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 Global Correlations module to find global opportunities by holding instruments from different markets.