Correlation Between Hyatt Hotels and Marriott International
Can any of the company-specific risk be diversified away by investing in both Hyatt Hotels 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 Hyatt Hotels and Marriott International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyatt Hotels and Marriott International, you can compare the effects of market volatilities on Hyatt Hotels 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 Hyatt Hotels with a short position of Marriott International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and Marriott International.
Diversification Opportunities for Hyatt Hotels and Marriott International
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyatt and Marriott is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and Marriott International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott International and Hyatt Hotels 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 Hyatt Hotels 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 Hyatt Hotels i.e., Hyatt Hotels and Marriott International go up and down completely randomly.
Pair Corralation between Hyatt Hotels and Marriott International
Taking into account the 90-day investment horizon Hyatt Hotels is expected to under-perform the Marriott International. But the stock apears to be less risky and, when comparing its historical volatility, Hyatt Hotels is 1.14 times less risky than Marriott International. The stock trades about -0.19 of its potential returns per unit of risk. The Marriott International is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 25,218 in Marriott International on January 26, 2024 and sell it today you would lose (812.00) from holding Marriott International or give up 3.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyatt Hotels vs. Marriott International
Performance |
| Timeline |
| Hyatt Hotels |
| Marriott International |
Hyatt Hotels and Marriott International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyatt Hotels and Marriott International
The main advantage of trading using opposite Hyatt Hotels and Marriott International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyatt Hotels 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.| Hyatt Hotels vs. Marriott International | Hyatt Hotels vs. InterContinental Hotels Group | Hyatt Hotels vs. Choice Hotels International | Hyatt Hotels vs. Wyndham Hotels Resorts |
| Marriott International vs. Hyatt Hotels | Marriott International vs. InterContinental Hotels Group | Marriott International vs. Choice Hotels International | Marriott International vs. Wyndham Hotels Resorts |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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