Correlation Between Expedia and Marriott International
Can any of the company-specific risk be diversified away by investing in both Expedia 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 Expedia and Marriott International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Expedia Group and Marriott International, you can compare the effects of market volatilities on Expedia 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 Expedia with a short position of Marriott International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expedia and Marriott International.
Diversification Opportunities for Expedia and Marriott International
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Expedia and Marriott is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Expedia Group and Marriott International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott International and Expedia 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 Expedia Group 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 Expedia i.e., Expedia and Marriott International go up and down completely randomly.
Pair Corralation between Expedia and Marriott International
Given the investment horizon of 90 days Expedia Group is expected to generate 1.5 times more return on investment than Marriott International. However, Expedia is 1.5 times more volatile than Marriott International. It trades about 0.2 of its potential returns per unit of risk. Marriott International is currently generating about 0.12 per unit of risk. If you would invest 11,011 in Expedia Group on August 24, 2024 and sell it today you would earn a total of 7,340 from holding Expedia Group or generate 66.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Expedia Group vs. Marriott International
Performance |
| Timeline |
| Expedia Group |
| Marriott International |
Expedia and Marriott International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Expedia and Marriott International
The main advantage of trading using opposite Expedia and Marriott International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expedia 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.| Expedia vs. Airbnb Inc | Expedia vs. TripAdvisor | Expedia vs. Royal Caribbean Cruises | Expedia vs. Norwegian Cruise Line |
| Marriott International vs. Hyatt Hotels | Marriott International vs. InterContinental Hotels Group | Marriott International vs. Choice Hotels International | Marriott International vs. Wyndham Hotels Resorts |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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