Correlation Between Marriott International and Salesforce
Can any of the company-specific risk be diversified away by investing in both Marriott International and Salesforce 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 Salesforce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marriott International and Salesforce, you can compare the effects of market volatilities on Marriott International and Salesforce 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 Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marriott International and Salesforce.
Diversification Opportunities for Marriott International and Salesforce
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marriott and Salesforce is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Marriott International and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce 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 Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salesforce has no effect on the direction of Marriott International i.e., Marriott International and Salesforce go up and down completely randomly.
Pair Corralation between Marriott International and Salesforce
Considering the 90-day investment horizon Marriott International is expected to generate 0.62 times more return on investment than Salesforce. However, Marriott International is 1.61 times less risky than Salesforce. It trades about -0.18 of its potential returns per unit of risk. Salesforce is currently generating about -0.23 per unit of risk. If you would invest 25,211 in Marriott International on January 25, 2024 and sell it today you would lose (1,242) from holding Marriott International or give up 4.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marriott International vs. Salesforce
Performance |
| Timeline |
| Marriott International |
| Salesforce |
Marriott International and Salesforce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marriott International and Salesforce
The main advantage of trading using opposite Marriott International and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marriott International position performs unexpectedly, Salesforce 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 Salesforce will offset losses from the drop in Salesforce's long position.| Marriott International vs. Yatra Online | Marriott International vs. Despegar Corp | Marriott International vs. Mondee Holdings | Marriott International vs. MakeMyTrip Limited |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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