Correlation Between Marriott International and Community Bank
Can any of the company-specific risk be diversified away by investing in both Marriott International and Community Bank 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 Community Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marriott International and Community Bank, you can compare the effects of market volatilities on Marriott International and Community Bank 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 Community Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marriott International and Community Bank.
Diversification Opportunities for Marriott International and Community Bank
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Marriott and Community is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Marriott International and Community Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Bank 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 Community Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Bank has no effect on the direction of Marriott International i.e., Marriott International and Community Bank go up and down completely randomly.
Pair Corralation between Marriott International and Community Bank
Considering the 90-day investment horizon Marriott International is expected to generate 2.79 times more return on investment than Community Bank. However, Marriott International is 2.79 times more volatile than Community Bank. It trades about 0.17 of its potential returns per unit of risk. Community Bank is currently generating about 0.3 per unit of risk. If you would invest 24,495 in Marriott International on September 25, 2024 and sell it today you would earn a total of 3,901 from holding Marriott International or generate 15.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 46.03% |
Values | Daily Returns |
Marriott International vs. Community Bank
Performance |
Timeline |
Marriott International |
Community Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Marriott International and Community Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Marriott International and Community Bank
The main advantage of trading using opposite Marriott International and Community Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marriott International position performs unexpectedly, Community Bank 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 Community Bank will offset losses from the drop in Community Bank's long position.Marriott International vs. Biglari Holdings | Marriott International vs. Smart Share Global | Marriott International vs. Sweetgreen | Marriott International vs. WW International |
Community Bank vs. MF Bancorp | Community Bank vs. Merchants Marine Bancorp | Community Bank vs. MNB Holdings Corp | Community Bank vs. United Bancorporation of |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |