Correlation Between IShares Global and Marriott International

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

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

Diversification Opportunities for IShares Global and Marriott International

0.18

Correlation Coefficient

IShares Global  Marriott International

Average diversification

The 3 months correlation between IShares and Marriott is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global AAA AA and Marriott International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott International and IShares Global 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 iShares Global AAA AA 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 IShares Global i.e., IShares Global and Marriott International go up and down completely randomly.

Pair Corralation between IShares Global and Marriott International

Assuming the 90 days trading horizon IShares Global is expected to generate 37.48 times less return on investment than Marriott International. But when comparing it to its historical volatility, iShares Global AAA AA is 5.32 times less risky than Marriott International. It trades about 0.04 of its potential returns per unit of risk. Marriott International is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  20,431  in Marriott International on September 11, 2024 and sell it today you would earn a total of  6,864  from holding Marriott International or generate 33.6% return on investment over 90 days.

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

iShares Global AAA AA  vs.  Marriott International

iShares Global AAA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global AAA AA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IShares Global is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Marriott International

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marriott International are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Marriott International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Global and Marriott International

The main advantage of trading using opposite IShares Global and Marriott International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global 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 iShares Global AAA AA 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..