Correlation Between Plastic Omnium and Marriott International
Can any of the company-specific risk be diversified away by investing in both Plastic Omnium 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 Plastic Omnium and Marriott International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Omnium and Marriott International, you can compare the effects of market volatilities on Plastic Omnium 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 Plastic Omnium with a short position of Marriott International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and Marriott International.
Diversification Opportunities for Plastic Omnium and Marriott International
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Plastic and Marriott is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and Marriott International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott International and Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium i.e., Plastic Omnium and Marriott International go up and down completely randomly.
Pair Corralation between Plastic Omnium and Marriott International
Assuming the 90 days trading horizon Plastic Omnium is expected to generate 2.16 times more return on investment than Marriott International. However, Plastic Omnium is 2.16 times more volatile than Marriott International. It trades about 0.15 of its potential returns per unit of risk. Marriott International is currently generating about 0.26 per unit of risk. If you would invest 997.00 in Plastic Omnium on November 4, 2024 and sell it today you would earn a total of 85.00 from holding Plastic Omnium or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plastic Omnium vs. Marriott International
Performance |
| Timeline |
| Plastic Omnium |
| Marriott International |
Plastic Omnium and Marriott International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Omnium and Marriott International
The main advantage of trading using opposite Plastic Omnium and Marriott International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium 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.| Plastic Omnium vs. PATTIES FOODS | Plastic Omnium vs. Thai Beverage Public | Plastic Omnium vs. MONEYSUPERMARKET | Plastic Omnium vs. Moneysupermarket Group PLC |
| Marriott International vs. Magic Software Enterprises | Marriott International vs. Kingdee International Software | Marriott International vs. RYU Apparel | Marriott International vs. Beta Systems Software |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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