Correlation Between Marriott International and KEYCORP

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

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

Diversification Opportunities for Marriott International and KEYCORP

-0.46

Correlation Coefficient

Marriott International  KEYCORP

Very good diversification

The 3 months correlation between Marriott and KEYCORP is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Marriott International and KEYCORP MEDIUM TERM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEYCORP MEDIUM TERM 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 KEYCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEYCORP MEDIUM TERM has no effect on the direction of Marriott International i.e., Marriott International and KEYCORP go up and down completely randomly.

Pair Corralation between Marriott International and KEYCORP

Considering the 90-day investment horizon Marriott International is expected to generate 2.45 times more return on investment than KEYCORP. However, Marriott International is 2.45 times more volatile than KEYCORP MEDIUM TERM. It trades about 0.16 of its potential returns per unit of risk. KEYCORP MEDIUM TERM is currently generating about -0.15 per unit of risk. 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	96.92%
Values	Daily Returns

Marriott International  vs.  KEYCORP MEDIUM TERM

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.

KEYCORP MEDIUM TERM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEYCORP MEDIUM TERM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KEYCORP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Marriott International and KEYCORP

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

The idea behind Marriott International and KEYCORP MEDIUM TERM 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.