Correlation Between MARRIOTT and Sweetgreen

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

By analyzing existing cross correlation between MARRIOTT INTERNATIONAL INC and Sweetgreen, you can compare the effects of market volatilities on MARRIOTT and Sweetgreen 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 Sweetgreen. Check out your portfolio center. Please also check ongoing floating volatility patterns of MARRIOTT and Sweetgreen.

Diversification Opportunities for MARRIOTT and Sweetgreen

0.03

Correlation Coefficient

MARRIOTT  Sweetgreen

Significant diversification

The 3 months correlation between MARRIOTT and Sweetgreen is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding MARRIOTT INTERNATIONAL INC and Sweetgreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweetgreen 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 INTERNATIONAL INC are associated (or correlated) with Sweetgreen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sweetgreen has no effect on the direction of MARRIOTT i.e., MARRIOTT and Sweetgreen go up and down completely randomly.

Pair Corralation between MARRIOTT and Sweetgreen

Assuming the 90 days trading horizon MARRIOTT INTERNATIONAL INC is expected to generate 0.25 times more return on investment than Sweetgreen. However, MARRIOTT INTERNATIONAL INC is 4.04 times less risky than Sweetgreen. It trades about -0.11 of its potential returns per unit of risk. Sweetgreen is currently generating about -0.23 per unit of risk. If you would invest  9,921  in MARRIOTT INTERNATIONAL INC on September 30, 2024 and sell it today you would lose (281.00) from holding MARRIOTT INTERNATIONAL INC or give up 2.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

MARRIOTT INTERNATIONAL INC  vs.  Sweetgreen

MARRIOTT INTERNATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MARRIOTT INTERNATIONAL 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.

Sweetgreen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sweetgreen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Sweetgreen is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MARRIOTT and Sweetgreen

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

The idea behind MARRIOTT INTERNATIONAL INC and Sweetgreen 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.