Correlation Between Air Transport and Marriott International
Can any of the company-specific risk be diversified away by investing in both Air Transport 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 Air Transport and Marriott International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Transport Services and Marriott International, you can compare the effects of market volatilities on Air Transport 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 Air Transport with a short position of Marriott International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Marriott International.
Diversification Opportunities for Air Transport and Marriott International
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Air and Marriott is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Marriott International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott International and Air Transport 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 Air Transport Services 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 Air Transport i.e., Air Transport and Marriott International go up and down completely randomly.
Pair Corralation between Air Transport and Marriott International
Assuming the 90 days horizon Air Transport Services is expected to generate 0.39 times more return on investment than Marriott International. However, Air Transport Services is 2.57 times less risky than Marriott International. It trades about 0.24 of its potential returns per unit of risk. Marriott International is currently generating about -0.34 per unit of risk. If you would invest 2,080 in Air Transport Services on October 13, 2024 and sell it today you would earn a total of 40.00 from holding Air Transport Services or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Transport Services vs. Marriott International
Performance |
| Timeline |
| Air Transport Services |
| Marriott International |
Air Transport and Marriott International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and Marriott International
The main advantage of trading using opposite Air Transport and Marriott International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport 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.| Air Transport vs. Superior Plus Corp | Air Transport vs. NMI Holdings | Air Transport vs. SIVERS SEMICONDUCTORS AB | Air Transport vs. Talanx AG |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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