Correlation Between Marriott International and GDI Integrated
Can any of the company-specific risk be diversified away by investing in both Marriott International and GDI Integrated 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 GDI Integrated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marriott International and GDI Integrated, you can compare the effects of market volatilities on Marriott International and GDI Integrated 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 GDI Integrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marriott International and GDI Integrated.
Diversification Opportunities for Marriott International and GDI Integrated
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marriott and GDI is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Marriott International and GDI Integrated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GDI Integrated 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 GDI Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GDI Integrated has no effect on the direction of Marriott International i.e., Marriott International and GDI Integrated go up and down completely randomly.
Pair Corralation between Marriott International and GDI Integrated
Considering the 90-day investment horizon Marriott International is expected to under-perform the GDI Integrated. But the stock apears to be less risky and, when comparing its historical volatility, Marriott International is 1.34 times less risky than GDI Integrated. The stock trades about -0.24 of its potential returns per unit of risk. The GDI Integrated is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 3,950 in GDI Integrated on February 10, 2024 and sell it today you would lose (236.00) from holding GDI Integrated or give up 5.97% 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. GDI Integrated
Performance |
| Timeline |
| Marriott International |
| GDI Integrated |
Marriott International and GDI Integrated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marriott International and GDI Integrated
The main advantage of trading using opposite Marriott International and GDI Integrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marriott International position performs unexpectedly, GDI Integrated 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 GDI Integrated will offset losses from the drop in GDI Integrated's long position.| 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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