Correlation Between Marriott International and Intergroup

Can any of the company-specific risk be diversified away by investing in both Marriott International and Intergroup 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 Intergroup into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Marriott International and The Intergroup, you can compare the effects of market volatilities on Marriott International and Intergroup 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 Intergroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marriott International and Intergroup.

Diversification Opportunities for Marriott International and Intergroup

-0.21

Correlation Coefficient

Marriott International  Intergroup

Very good diversification

The 3 months correlation between Marriott and Intergroup is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Marriott International and The Intergroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intergroup 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 Intergroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intergroup has no effect on the direction of Marriott International i.e., Marriott International and Intergroup go up and down completely randomly.

Pair Corralation between Marriott International and Intergroup

Considering the 90-day investment horizon Marriott International is expected to under-perform the Intergroup. But the stock apears to be less risky and, when comparing its historical volatility, Marriott International is 3.19 times less risky than Intergroup. The stock trades about -0.2 of its potential returns per unit of risk. The The Intergroup is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,087  in The Intergroup on February 1, 2024 and sell it today you would lose (24.00) from holding The Intergroup or give up 1.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Marriott International  vs.  The Intergroup

Marriott International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marriott International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Marriott International is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Intergroup

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Intergroup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Intergroup is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Marriott International and Intergroup

The main advantage of trading using opposite Marriott International and Intergroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marriott International position performs unexpectedly, Intergroup 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 Intergroup will offset losses from the drop in Intergroup's long position.

The idea behind Marriott International and The Intergroup pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.