Correlation Between Stellar and MARRIOTT

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

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

Diversification Opportunities for Stellar and MARRIOTT

0.63

Correlation Coefficient

Stellar  MARRIOTT

Poor diversification

The 3 months correlation between Stellar and MARRIOTT is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and MARRIOTT OWNERSHIP RESORTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARRIOTT OWNERSHIP and Stellar 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 Stellar 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 Stellar i.e., Stellar and MARRIOTT go up and down completely randomly.

Pair Corralation between Stellar and MARRIOTT

Assuming the 90 days trading horizon Stellar is expected to under-perform the MARRIOTT. In addition to that, Stellar is 16.9 times more volatile than MARRIOTT OWNERSHIP RESORTS. It trades about -0.03 of its total potential returns per unit of risk. MARRIOTT OWNERSHIP RESORTS is currently generating about -0.2 per unit of volatility. If you would invest  9,722  in MARRIOTT OWNERSHIP RESORTS on October 11, 2024 and sell it today you would lose (199.00) from holding MARRIOTT OWNERSHIP RESORTS or give up 2.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Stellar  vs.  MARRIOTT OWNERSHIP RESORTS

Stellar

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Stellar exhibited solid returns over the last few months and may actually be approaching a breakup point.

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

Pair Trading with Stellar and MARRIOTT

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

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.