Correlation Between Marriott International and Hilton Worldwide
Can any of the company-specific risk be diversified away by investing in both Marriott International and Hilton Worldwide 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 Marriott International and Hilton Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marriott International and Hilton Worldwide Holdings, you can compare the effects of market volatilities on Marriott International and Hilton Worldwide 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 Marriott International with a short position of Hilton Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marriott International and Hilton Worldwide.
Diversification Opportunities for Marriott International and Hilton Worldwide
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Marriott and Hilton is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Marriott International and Hilton Worldwide Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Worldwide Holdings and Marriott International 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 Marriott International are associated (or correlated) with Hilton Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Worldwide Holdings has no effect on the direction of Marriott International i.e., Marriott International and Hilton Worldwide go up and down completely randomly.
Pair Corralation between Marriott International and Hilton Worldwide
Assuming the 90 days horizon Marriott International is expected to generate 1.1 times more return on investment than Hilton Worldwide. However, Marriott International is 1.1 times more volatile than Hilton Worldwide Holdings. It trades about 0.38 of its potential returns per unit of risk. Hilton Worldwide Holdings is currently generating about 0.25 per unit of risk. If you would invest 23,309 in Marriott International on September 3, 2024 and sell it today you would earn a total of 3,586 from holding Marriott International or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marriott International vs. Hilton Worldwide Holdings
Performance |
| Timeline |
| Marriott International |
| Hilton Worldwide Holdings |
Marriott International and Hilton Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marriott International and Hilton Worldwide
The main advantage of trading using opposite Marriott International and Hilton Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marriott International position performs unexpectedly, Hilton Worldwide 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 Hilton Worldwide will offset losses from the drop in Hilton Worldwide's long position.| Marriott International vs. Hilton Worldwide Holdings | Marriott International vs. Hyatt Hotels | Marriott International vs. InterContinental Hotels Group | Marriott International vs. INTERCONT HOTELS |
| Hilton Worldwide vs. EMBARK EDUCATION LTD | Hilton Worldwide vs. Chunghwa Telecom Co | Hilton Worldwide vs. CAREER EDUCATION | Hilton Worldwide vs. SK TELECOM TDADR |
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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