Correlation Between MARRIOTT and Hertz Global

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

Diversification Opportunities for MARRIOTT and Hertz Global

-0.36

Correlation Coefficient

MARRIOTT  Hertz Global

Very good diversification

The 3 months correlation between MARRIOTT and Hertz is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding MARRIOTT INTL INC and Hertz Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hertz Global Holdings 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 Hertz Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hertz Global Holdings has no effect on the direction of MARRIOTT i.e., MARRIOTT and Hertz Global go up and down completely randomly.

Pair Corralation between MARRIOTT and Hertz Global

Assuming the 90 days trading horizon MARRIOTT INTL INC is expected to generate 0.12 times more return on investment than Hertz Global. However, MARRIOTT INTL INC is 8.55 times less risky than Hertz Global. It trades about 0.08 of its potential returns per unit of risk. Hertz Global Holdings is currently generating about -0.34 per unit of risk. If you would invest  9,752  in MARRIOTT INTL INC on September 24, 2024 and sell it today you would earn a total of  63.00  from holding MARRIOTT INTL INC or generate 0.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

MARRIOTT INTL INC  vs.  Hertz Global Holdings

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.

Hertz Global Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hertz Global Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Hertz Global is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MARRIOTT and Hertz Global

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

The idea behind MARRIOTT INTL INC and Hertz Global Holdings 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.