Correlation Between Vantage Drilling and MARRIOTT

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

By analyzing existing cross correlation between Vantage Drilling International and MARRIOTT OWNERSHIP RESORTS, you can compare the effects of market volatilities on Vantage Drilling and MARRIOTT 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 Vantage Drilling with a short position of MARRIOTT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vantage Drilling and MARRIOTT.

Diversification Opportunities for Vantage Drilling and MARRIOTT

-0.41

Correlation Coefficient

Vantage Drilling  MARRIOTT

Very good diversification

The 3 months correlation between Vantage and MARRIOTT is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Vantage Drilling International and MARRIOTT OWNERSHIP RESORTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARRIOTT OWNERSHIP and Vantage Drilling 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 Vantage Drilling International are associated (or correlated) with MARRIOTT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARRIOTT OWNERSHIP has no effect on the direction of Vantage Drilling i.e., Vantage Drilling and MARRIOTT go up and down completely randomly.

Pair Corralation between Vantage Drilling and MARRIOTT

Assuming the 90 days horizon Vantage Drilling International is expected to under-perform the MARRIOTT. But the pink sheet apears to be less risky and, when comparing its historical volatility, Vantage Drilling International is 1.6 times less risky than MARRIOTT. The pink sheet trades about -0.13 of its potential returns per unit of risk. The MARRIOTT OWNERSHIP RESORTS is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  9,702  in MARRIOTT OWNERSHIP RESORTS on October 26, 2024 and sell it today you would lose (179.00) from holding MARRIOTT OWNERSHIP RESORTS or give up 1.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Vantage Drilling International  vs.  MARRIOTT OWNERSHIP RESORTS

Vantage Drilling Int

Risk-Adjusted Performance

0 of 100

Very Weak

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

MARRIOTT OWNERSHIP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MARRIOTT OWNERSHIP RESORTS 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.

Pair Trading with Vantage Drilling and MARRIOTT

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

The idea behind Vantage Drilling International and MARRIOTT OWNERSHIP RESORTS 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.