Correlation Between MARRIOTT and BRP

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

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

Diversification Opportunities for MARRIOTT and BRP

0.26

Correlation Coefficient

MARRIOTT  BRP

Modest diversification

The 3 months correlation between MARRIOTT and BRP is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding MARRIOTT INTL INC and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc and MARRIOTT 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 INTL INC are associated (or correlated) with BRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRP Inc has no effect on the direction of MARRIOTT i.e., MARRIOTT and BRP go up and down completely randomly.

Pair Corralation between MARRIOTT and BRP

Assuming the 90 days trading horizon MARRIOTT INTL INC is expected to under-perform the BRP. But the bond apears to be less risky and, when comparing its historical volatility, MARRIOTT INTL INC is 4.4 times less risky than BRP. The bond trades about -0.15 of its potential returns per unit of risk. The BRP Inc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  5,084  in BRP Inc on September 25, 2024 and sell it today you would lose (36.00) from holding BRP Inc or give up 0.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	61.9%
Values	Daily Returns

MARRIOTT INTL INC  vs.  BRP Inc

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 latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for MARRIOTT INTL INC investors.

BRP Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with MARRIOTT and BRP

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

The idea behind MARRIOTT INTL INC and BRP 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.