Correlation Between USWE SPORTS and Marriott International
Can any of the company-specific risk be diversified away by investing in both USWE SPORTS and Marriott International 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 USWE SPORTS and Marriott International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USWE SPORTS AB and Marriott International, you can compare the effects of market volatilities on USWE SPORTS and Marriott International 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 USWE SPORTS with a short position of Marriott International. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE SPORTS and Marriott International.
Diversification Opportunities for USWE SPORTS and Marriott International
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between USWE and Marriott is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB and Marriott International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott International and USWE SPORTS 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 USWE SPORTS AB are associated (or correlated) with Marriott International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marriott International has no effect on the direction of USWE SPORTS i.e., USWE SPORTS and Marriott International go up and down completely randomly.
Pair Corralation between USWE SPORTS and Marriott International
Assuming the 90 days horizon USWE SPORTS AB is expected to generate 2.2 times more return on investment than Marriott International. However, USWE SPORTS is 2.2 times more volatile than Marriott International. It trades about 0.17 of its potential returns per unit of risk. Marriott International is currently generating about 0.13 per unit of risk. If you would invest 61.00 in USWE SPORTS AB on October 25, 2024 and sell it today you would earn a total of 21.00 from holding USWE SPORTS AB or generate 34.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.33% |
| Values | Daily Returns |
USWE SPORTS AB vs. Marriott International
Performance |
| Timeline |
| USWE SPORTS AB |
| Marriott International |
USWE SPORTS and Marriott International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USWE SPORTS and Marriott International
The main advantage of trading using opposite USWE SPORTS and Marriott International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USWE SPORTS position performs unexpectedly, Marriott International 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 International will offset losses from the drop in Marriott International's long position.| USWE SPORTS vs. Costco Wholesale Corp | USWE SPORTS vs. COSTCO WHOLESALE CDR | USWE SPORTS vs. SPARTAN STORES | USWE SPORTS vs. National Retail Properties |
| Marriott International vs. Summit Materials | Marriott International vs. Plastic Omnium | Marriott International vs. APPLIED MATERIALS | Marriott International vs. USWE SPORTS AB |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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