Correlation Between Marriott International and Texas Gulf
Can any of the company-specific risk be diversified away by investing in both Marriott International and Texas Gulf 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 Texas Gulf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marriott International and Texas Gulf Energy, you can compare the effects of market volatilities on Marriott International and Texas Gulf 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 Texas Gulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marriott International and Texas Gulf.
Diversification Opportunities for Marriott International and Texas Gulf
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Marriott and Texas is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Marriott International and Texas Gulf Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Gulf Energy 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 Texas Gulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Gulf Energy has no effect on the direction of Marriott International i.e., Marriott International and Texas Gulf go up and down completely randomly.
Pair Corralation between Marriott International and Texas Gulf
Considering the 90-day investment horizon Marriott International is expected to under-perform the Texas Gulf. But the stock apears to be less risky and, when comparing its historical volatility, Marriott International is 1.28 times less risky than Texas Gulf. The stock trades about -0.26 of its potential returns per unit of risk. The Texas Gulf Energy is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 194,176 in Texas Gulf Energy on January 20, 2024 and sell it today you would earn a total of 22,460 from holding Texas Gulf Energy or generate 11.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Marriott International vs. Texas Gulf Energy
Performance |
| Timeline |
| Marriott International |
| Texas Gulf Energy |
Marriott International and Texas Gulf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marriott International and Texas Gulf
The main advantage of trading using opposite Marriott International and Texas Gulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marriott International position performs unexpectedly, Texas Gulf 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 Texas Gulf will offset losses from the drop in Texas Gulf's long position.| Marriott International vs. Yatra Online | Marriott International vs. Despegar Corp | Marriott International vs. Mondee Holdings | Marriott International vs. MakeMyTrip Limited |
| Texas Gulf vs. Fiserv Inc | Texas Gulf vs. Schlumberger NV | Texas Gulf vs. Halliburton | Texas Gulf vs. Baker Hughes Co |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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