Correlation Between Suburban Propane and MARRIOTT

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

By analyzing existing cross correlation between Suburban Propane Partners and MARRIOTT INTL INC, you can compare the effects of market volatilities on Suburban Propane and MARRIOTT 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 Suburban Propane with a short position of MARRIOTT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suburban Propane and MARRIOTT.

Diversification Opportunities for Suburban Propane and MARRIOTT

0.15

Correlation Coefficient

Suburban Propane  MARRIOTT

Average diversification

The 3 months correlation between Suburban and MARRIOTT is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Suburban Propane Partners and MARRIOTT INTL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARRIOTT INTL INC and Suburban Propane 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 Suburban Propane Partners are associated (or correlated) with MARRIOTT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARRIOTT INTL INC has no effect on the direction of Suburban Propane i.e., Suburban Propane and MARRIOTT go up and down completely randomly.

Pair Corralation between Suburban Propane and MARRIOTT

Considering the 90-day investment horizon Suburban Propane Partners is expected to under-perform the MARRIOTT. In addition to that, Suburban Propane is 4.5 times more volatile than MARRIOTT INTL INC. It trades about -0.04 of its total potential returns per unit of risk. MARRIOTT INTL INC is currently generating about -0.14 per unit of volatility. If you would invest  9,934  in MARRIOTT INTL INC on September 26, 2024 and sell it today you would lose (238.00) from holding MARRIOTT INTL INC or give up 2.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.12%
Values	Daily Returns

Suburban Propane Partners  vs.  MARRIOTT INTL INC

Suburban Propane Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suburban Propane Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Suburban Propane is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

MARRIOTT INTL INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MARRIOTT INTL INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MARRIOTT is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Suburban Propane and MARRIOTT

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

The idea behind Suburban Propane Partners and MARRIOTT INTL INC 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.