Correlation Between MARRIOTT and Nuvalent

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

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

Diversification Opportunities for MARRIOTT and Nuvalent

-0.15

Correlation Coefficient

MARRIOTT  Nuvalent

Good diversification

The 3 months correlation between MARRIOTT and Nuvalent is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding MARRIOTT INTERNATIONAL INC and Nuvalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvalent and MARRIOTT 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 INC are associated (or correlated) with Nuvalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvalent has no effect on the direction of MARRIOTT i.e., MARRIOTT and Nuvalent go up and down completely randomly.

Pair Corralation between MARRIOTT and Nuvalent

Assuming the 90 days trading horizon MARRIOTT INTERNATIONAL INC is expected to generate 0.06 times more return on investment than Nuvalent. However, MARRIOTT INTERNATIONAL INC is 15.98 times less risky than Nuvalent. It trades about -0.02 of its potential returns per unit of risk. Nuvalent is currently generating about -0.12 per unit of risk. If you would invest  10,049  in MARRIOTT INTERNATIONAL INC on September 24, 2024 and sell it today you would lose (18.00) from holding MARRIOTT INTERNATIONAL INC or give up 0.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

MARRIOTT INTERNATIONAL INC  vs.  Nuvalent

MARRIOTT INTERNATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nuvalent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuvalent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with MARRIOTT and Nuvalent

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

The idea behind MARRIOTT INTERNATIONAL INC and Nuvalent 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.