Correlation Between Marriott International and Las Vegas

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Can any of the company-specific risk be diversified away by investing in both Marriott International and Las Vegas 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 Las Vegas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marriott International and Las Vegas Sands, you can compare the effects of market volatilities on Marriott International and Las Vegas 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 Las Vegas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marriott International and Las Vegas.

Diversification Opportunities for Marriott International and Las Vegas

0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Marriott and Las is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Marriott International and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands 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 Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of Marriott International i.e., Marriott International and Las Vegas go up and down completely randomly.

Pair Corralation between Marriott International and Las Vegas

Considering the 90-day investment horizon Marriott International is expected to generate 0.52 times more return on investment than Las Vegas. However, Marriott International is 1.91 times less risky than Las Vegas. It trades about 0.09 of its potential returns per unit of risk. Las Vegas Sands is currently generating about -0.09 per unit of risk. If you would invest  24,903  in Marriott International on December 29, 2023 and sell it today you would earn a total of  453.00  from holding Marriott International or generate 1.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Marriott International  vs.  Las Vegas Sands

 Performance 
       Timeline  
Marriott International 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
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.
Las Vegas Sands 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Las Vegas Sands are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Las Vegas is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Marriott International and Las Vegas Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Marriott International and Las Vegas

The main advantage of trading using opposite Marriott International and Las Vegas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marriott International position performs unexpectedly, Las Vegas 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 Las Vegas will offset losses from the drop in Las Vegas' long position.
The idea behind Marriott International and Las Vegas Sands 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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