Correlation Between Universal Health and Marriott International

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

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

Diversification Opportunities for Universal Health and Marriott International

-0.69

Correlation Coefficient

Universal Health  Marriott International

Excellent diversification

The 3 months correlation between Universal and Marriott is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services, and Marriott International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott International and Universal Health 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 Universal Health Services, are associated (or correlated) with Marriott International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marriott International has no effect on the direction of Universal Health i.e., Universal Health and Marriott International go up and down completely randomly.

Pair Corralation between Universal Health and Marriott International

Assuming the 90 days trading horizon Universal Health Services, is expected to under-perform the Marriott International. In addition to that, Universal Health is 1.41 times more volatile than Marriott International. It trades about -0.15 of its total potential returns per unit of risk. Marriott International is currently generating about 0.14 per unit of volatility. If you would invest  37,313  in Marriott International on October 25, 2024 and sell it today you would earn a total of  4,105  from holding Marriott International or generate 11.0% return on investment over 90 days.

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

Universal Health Services,  vs.  Marriott International

Universal Health Ser

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Health Services, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Marriott International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marriott International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Marriott International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Universal Health and Marriott International

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

The idea behind Universal Health Services, and Marriott International 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.