Correlation Between Wynn Resorts and Marriott Vacations

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

By analyzing existing cross correlation between Wynn Resorts Limited and Marriott Vacations Worldwide, you can compare the effects of market volatilities on Wynn Resorts and Marriott Vacations 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 Wynn Resorts with a short position of Marriott Vacations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wynn Resorts and Marriott Vacations.

Diversification Opportunities for Wynn Resorts and Marriott Vacations

-0.43

Correlation Coefficient

Wynn Resorts  Marriott Vacations

Very good diversification

The 3 months correlation between Wynn and Marriott is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Wynn Resorts Limited and Marriott Vacations Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott Vacations and Wynn Resorts 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 Wynn Resorts Limited are associated (or correlated) with Marriott Vacations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marriott Vacations has no effect on the direction of Wynn Resorts i.e., Wynn Resorts and Marriott Vacations go up and down completely randomly.

Pair Corralation between Wynn Resorts and Marriott Vacations

Assuming the 90 days horizon Wynn Resorts Limited is expected to under-perform the Marriott Vacations. But the stock apears to be less risky and, when comparing its historical volatility, Wynn Resorts Limited is 1.4 times less risky than Marriott Vacations. The stock trades about -0.66 of its potential returns per unit of risk. The Marriott Vacations Worldwide is currently generating about -0.3 of returns per unit of risk over similar time horizon. If you would invest  9,019  in Marriott Vacations Worldwide on October 9, 2024 and sell it today you would lose (669.00) from holding Marriott Vacations Worldwide or give up 7.42% of portfolio value over 90 days.

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

Wynn Resorts Limited  vs.  Marriott Vacations Worldwide

Wynn Resorts Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wynn Resorts Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Marriott Vacations

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marriott Vacations Worldwide are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Marriott Vacations reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wynn Resorts and Marriott Vacations

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

The idea behind Wynn Resorts Limited and Marriott Vacations Worldwide 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.