Correlation Between APPLIED MATERIALS and Marriott International
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS 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 APPLIED MATERIALS and Marriott International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and Marriott International, you can compare the effects of market volatilities on APPLIED MATERIALS 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 APPLIED MATERIALS with a short position of Marriott International. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and Marriott International.
Diversification Opportunities for APPLIED MATERIALS and Marriott International
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between APPLIED and Marriott is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and Marriott International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott International and APPLIED MATERIALS 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 APPLIED MATERIALS 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 APPLIED MATERIALS i.e., APPLIED MATERIALS and Marriott International go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and Marriott International
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 1.61 times more return on investment than Marriott International. However, APPLIED MATERIALS is 1.61 times more volatile than Marriott International. It trades about 0.08 of its potential returns per unit of risk. Marriott International is currently generating about 0.13 per unit of risk. If you would invest 17,289 in APPLIED MATERIALS on October 25, 2024 and sell it today you would earn a total of 1,829 from holding APPLIED MATERIALS or generate 10.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.33% |
| Values | Daily Returns |
APPLIED MATERIALS vs. Marriott International
Performance |
| Timeline |
| APPLIED MATERIALS |
| Marriott International |
APPLIED MATERIALS and Marriott International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and Marriott International
The main advantage of trading using opposite APPLIED MATERIALS and Marriott International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS 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.| APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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