Correlation Between Marriot Vacations and Melco Resorts
Can any of the company-specific risk be diversified away by investing in both Marriot Vacations and Melco Resorts 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 Marriot Vacations and Melco Resorts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marriot Vacations Worldwide and Melco Resorts Entertainment, you can compare the effects of market volatilities on Marriot Vacations and Melco Resorts 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 Marriot Vacations with a short position of Melco Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marriot Vacations and Melco Resorts.
Diversification Opportunities for Marriot Vacations and Melco Resorts
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Marriot and Melco is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Marriot Vacations Worldwide and Melco Resorts Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melco Resorts Entert and Marriot Vacations 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 Marriot Vacations Worldwide are associated (or correlated) with Melco Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melco Resorts Entert has no effect on the direction of Marriot Vacations i.e., Marriot Vacations and Melco Resorts go up and down completely randomly.
Pair Corralation between Marriot Vacations and Melco Resorts
Considering the 90-day investment horizon Marriot Vacations Worldwide is expected to generate 0.8 times more return on investment than Melco Resorts. However, Marriot Vacations Worldwide is 1.25 times less risky than Melco Resorts. It trades about 0.03 of its potential returns per unit of risk. Melco Resorts Entertainment is currently generating about -0.03 per unit of risk. If you would invest 8,013 in Marriot Vacations Worldwide on November 3, 2024 and sell it today you would earn a total of 664.00 from holding Marriot Vacations Worldwide or generate 8.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marriot Vacations Worldwide vs. Melco Resorts Entertainment
Performance |
| Timeline |
| Marriot Vacations |
| Melco Resorts Entert |
Marriot Vacations and Melco Resorts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marriot Vacations and Melco Resorts
The main advantage of trading using opposite Marriot Vacations and Melco Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marriot Vacations position performs unexpectedly, Melco Resorts 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 Melco Resorts will offset losses from the drop in Melco Resorts' long position.| Marriot Vacations vs. Vail Resorts | Marriot Vacations vs. Monarch Casino Resort | Marriot Vacations vs. Studio City International | Marriot Vacations vs. Hilton Grand Vacations |
| Melco Resorts vs. Wynn Resorts Limited | Melco Resorts vs. MGM Resorts International | Melco Resorts vs. Caesars Entertainment | Melco Resorts vs. Penn National Gaming |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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