Correlation Between Marriott International and MakeMyTrip

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

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

Diversification Opportunities for Marriott International and MakeMyTrip

0.84

Correlation Coefficient

Marriott International  MakeMyTrip

Very poor diversification

The 3 months correlation between Marriott and MakeMyTrip is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Marriott International and MakeMyTrip Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MakeMyTrip Limited 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 MakeMyTrip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MakeMyTrip Limited has no effect on the direction of Marriott International i.e., Marriott International and MakeMyTrip go up and down completely randomly.

Pair Corralation between Marriott International and MakeMyTrip

Assuming the 90 days horizon Marriott International is expected to under-perform the MakeMyTrip. But the stock apears to be less risky and, when comparing its historical volatility, Marriott International is 1.7 times less risky than MakeMyTrip. The stock trades about -0.11 of its potential returns per unit of risk. The MakeMyTrip Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  10,355  in MakeMyTrip Limited on September 24, 2024 and sell it today you would earn a total of  665.00  from holding MakeMyTrip Limited or generate 6.42% return on investment over 90 days.

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

Marriott International  vs.  MakeMyTrip Limited

Marriott International

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marriott International are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Marriott International reported solid returns over the last few months and may actually be approaching a breakup point.

MakeMyTrip Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MakeMyTrip Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MakeMyTrip may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Marriott International and MakeMyTrip

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

The idea behind Marriott International and MakeMyTrip Limited 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.