Correlation Between Western Copper and MARRIOTT

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

By analyzing existing cross correlation between Western Copper and and MARRIOTT INTL INC, you can compare the effects of market volatilities on Western Copper 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 Western Copper with a short position of MARRIOTT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and MARRIOTT.

Diversification Opportunities for Western Copper and MARRIOTT

0.43

Correlation Coefficient

Western Copper  MARRIOTT

Very weak diversification

The 3 months correlation between Western and MARRIOTT is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and MARRIOTT INTL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARRIOTT INTL INC and Western Copper 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 Western Copper and 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 INTL INC has no effect on the direction of Western Copper i.e., Western Copper and MARRIOTT go up and down completely randomly.

Pair Corralation between Western Copper and MARRIOTT

Considering the 90-day investment horizon Western Copper and is expected to under-perform the MARRIOTT. In addition to that, Western Copper is 6.9 times more volatile than MARRIOTT INTL INC. It trades about -0.07 of its total potential returns per unit of risk. MARRIOTT INTL INC is currently generating about -0.14 per unit of volatility. If you would invest  9,934  in MARRIOTT INTL INC on September 26, 2024 and sell it today you would lose (238.00) from holding MARRIOTT INTL INC or give up 2.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.12%
Values	Daily Returns

Western Copper and  vs.  MARRIOTT INTL INC

Western Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Copper and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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

Pair Trading with Western Copper and MARRIOTT

The main advantage of trading using opposite Western Copper and MARRIOTT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper 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 Western Copper and and MARRIOTT INTL INC 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.