Correlation Between MARRIOTT and Dine Brands

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

Diversification Opportunities for MARRIOTT and Dine Brands

0.56

Correlation Coefficient

MARRIOTT  Dine Brands

Very weak diversification

The 3 months correlation between MARRIOTT and Dine is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding MARRIOTT INTERNATIONAL INC and Dine Brands Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dine Brands Global 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 Dine Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dine Brands Global has no effect on the direction of MARRIOTT i.e., MARRIOTT and Dine Brands go up and down completely randomly.

Pair Corralation between MARRIOTT and Dine Brands

Assuming the 90 days trading horizon MARRIOTT INTERNATIONAL INC is expected to generate 0.14 times more return on investment than Dine Brands. However, MARRIOTT INTERNATIONAL INC is 6.92 times less risky than Dine Brands. It trades about -0.11 of its potential returns per unit of risk. Dine Brands Global is currently generating about -0.03 per unit of risk. If you would invest  8,852  in MARRIOTT INTERNATIONAL INC on October 22, 2024 and sell it today you would lose (278.00) from holding MARRIOTT INTERNATIONAL INC or give up 3.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

MARRIOTT INTERNATIONAL INC  vs.  Dine Brands Global

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

Dine Brands Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dine Brands Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with MARRIOTT and Dine Brands

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

The idea behind MARRIOTT INTERNATIONAL INC and Dine Brands Global 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.