Correlation Between MARRIOTT and Everus Construction

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

Diversification Opportunities for MARRIOTT and Everus Construction

-0.05

Correlation Coefficient

MARRIOTT  Everus Construction

Good diversification

The 3 months correlation between MARRIOTT and Everus is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding MARRIOTT INTERNATIONAL INC and Everus Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everus Construction 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 Everus Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everus Construction has no effect on the direction of MARRIOTT i.e., MARRIOTT and Everus Construction go up and down completely randomly.

Pair Corralation between MARRIOTT and Everus Construction

Assuming the 90 days trading horizon MARRIOTT INTERNATIONAL INC is expected to under-perform the Everus Construction. But the bond apears to be less risky and, when comparing its historical volatility, MARRIOTT INTERNATIONAL INC is 4.32 times less risky than Everus Construction. The bond trades about -0.18 of its potential returns per unit of risk. The Everus Construction Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  6,391  in Everus Construction Group on September 24, 2024 and sell it today you would earn a total of  318.00  from holding Everus Construction Group or generate 4.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

MARRIOTT INTERNATIONAL INC  vs.  Everus Construction Group

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.

Everus Construction

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Everus Construction Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Everus Construction reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MARRIOTT and Everus Construction

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

The idea behind MARRIOTT INTERNATIONAL INC and Everus Construction Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.