Correlation Between ACCOR SPADR and Marriott International
Can any of the company-specific risk be diversified away by investing in both ACCOR SPADR 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 ACCOR SPADR and Marriott International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ACCOR SPADR NEW and Marriott International, you can compare the effects of market volatilities on ACCOR SPADR 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 ACCOR SPADR with a short position of Marriott International. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACCOR SPADR and Marriott International.
Diversification Opportunities for ACCOR SPADR and Marriott International
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ACCOR and Marriott is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding ACCOR SPADR NEW and Marriott International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott International and ACCOR SPADR 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 ACCOR SPADR NEW 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 ACCOR SPADR i.e., ACCOR SPADR and Marriott International go up and down completely randomly.
Pair Corralation between ACCOR SPADR and Marriott International
Assuming the 90 days trading horizon ACCOR SPADR NEW is expected to generate 1.07 times more return on investment than Marriott International. However, ACCOR SPADR is 1.07 times more volatile than Marriott International. It trades about 0.1 of its potential returns per unit of risk. Marriott International is currently generating about 0.1 per unit of risk. If you would invest 433.00 in ACCOR SPADR NEW on September 12, 2024 and sell it today you would earn a total of 467.00 from holding ACCOR SPADR NEW or generate 107.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ACCOR SPADR NEW vs. Marriott International
Performance |
| Timeline |
| ACCOR SPADR NEW |
| Marriott International |
ACCOR SPADR and Marriott International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ACCOR SPADR and Marriott International
The main advantage of trading using opposite ACCOR SPADR and Marriott International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACCOR SPADR 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.| ACCOR SPADR vs. BW OFFSHORE LTD | ACCOR SPADR vs. Soken Chemical Engineering | ACCOR SPADR vs. Sanyo Chemical Industries | ACCOR SPADR vs. Sabra Health Care |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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