Correlation Between Marriott International and Hyatt Hotels
Can any of the company-specific risk be diversified away by investing in both Marriott International and Hyatt Hotels 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 Hyatt Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marriott International and Hyatt Hotels, you can compare the effects of market volatilities on Marriott International and Hyatt Hotels 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 Hyatt Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marriott International and Hyatt Hotels.
Diversification Opportunities for Marriott International and Hyatt Hotels
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marriott and Hyatt is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Marriott International and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels 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 Hyatt Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyatt Hotels has no effect on the direction of Marriott International i.e., Marriott International and Hyatt Hotels go up and down completely randomly.
Pair Corralation between Marriott International and Hyatt Hotels
Considering the 90-day investment horizon Marriott International is expected to generate 1.23 times more return on investment than Hyatt Hotels. However, Marriott International is 1.23 times more volatile than Hyatt Hotels. It trades about -0.29 of its potential returns per unit of risk. Hyatt Hotels is currently generating about -0.39 per unit of risk. If you would invest 25,527 in Marriott International on January 21, 2024 and sell it today you would lose (1,927) from holding Marriott International or give up 7.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marriott International vs. Hyatt Hotels
Performance |
| Timeline |
| Marriott International |
| Hyatt Hotels |
Marriott International and Hyatt Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marriott International and Hyatt Hotels
The main advantage of trading using opposite Marriott International and Hyatt Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marriott International position performs unexpectedly, Hyatt Hotels 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 Hyatt Hotels will offset losses from the drop in Hyatt Hotels' long position.| Marriott International vs. Yatra Online | Marriott International vs. Despegar Corp | Marriott International vs. Mondee Holdings | Marriott International vs. MakeMyTrip Limited |
| Hyatt Hotels vs. Yatra Online | Hyatt Hotels vs. Despegar Corp | Hyatt Hotels vs. Mondee Holdings | Hyatt Hotels vs. MakeMyTrip Limited |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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