Correlation Between Krispy Kreme and Marriott International

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

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

Diversification Opportunities for Krispy Kreme and Marriott International

-0.45

Correlation Coefficient

Krispy Kreme  Marriott International

Very good diversification

The 3 months correlation between Krispy and Marriott is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Krispy Kreme and Marriott International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott International and Krispy Kreme 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 Krispy Kreme are associated (or correlated) with Marriott International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marriott International has no effect on the direction of Krispy Kreme i.e., Krispy Kreme and Marriott International go up and down completely randomly.

Pair Corralation between Krispy Kreme and Marriott International

Given the investment horizon of 90 days Krispy Kreme is expected to under-perform the Marriott International. In addition to that, Krispy Kreme is 1.33 times more volatile than Marriott International. It trades about -0.14 of its total potential returns per unit of risk. Marriott International is currently generating about 0.16 per unit of volatility. If you would invest  24,682  in Marriott International on September 24, 2024 and sell it today you would earn a total of  3,714  from holding Marriott International or generate 15.05% return on investment over 90 days.

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

Krispy Kreme  vs.  Marriott International

Krispy Kreme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Krispy Kreme has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Marriott International

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marriott International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Marriott International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Krispy Kreme and Marriott International

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

The idea behind Krispy Kreme and Marriott International 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.