Correlation Between MARRIOTT and Broadstone Net

Can any of the company-specific risk be diversified away by investing in both MARRIOTT and Broadstone Net 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 Broadstone Net 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 Broadstone Net Lease, you can compare the effects of market volatilities on MARRIOTT and Broadstone Net 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 Broadstone Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of MARRIOTT and Broadstone Net.

Diversification Opportunities for MARRIOTT and Broadstone Net

0.53

Correlation Coefficient

MARRIOTT  Broadstone Net

Very weak diversification

The 3 months correlation between MARRIOTT and Broadstone is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding MARRIOTT INTL INC and Broadstone Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadstone Net Lease 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 Broadstone Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadstone Net Lease has no effect on the direction of MARRIOTT i.e., MARRIOTT and Broadstone Net go up and down completely randomly.

Pair Corralation between MARRIOTT and Broadstone Net

Assuming the 90 days trading horizon MARRIOTT INTL INC is expected to generate 0.43 times more return on investment than Broadstone Net. However, MARRIOTT INTL INC is 2.32 times less risky than Broadstone Net. It trades about -0.04 of its potential returns per unit of risk. Broadstone Net Lease is currently generating about -0.22 per unit of risk. If you would invest  9,922  in MARRIOTT INTL INC on September 24, 2024 and sell it today you would lose (107.00) from holding MARRIOTT INTL INC or give up 1.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.85%
Values	Daily Returns

MARRIOTT INTL INC  vs.  Broadstone Net Lease

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 current stock price disturbance, may contribute to short-term losses for the investors.

Broadstone Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadstone Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with MARRIOTT and Broadstone Net

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

The idea behind MARRIOTT INTL INC and Broadstone Net Lease 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.