Correlation Between GD Entertainment and Marriot Vacations

Can any of the company-specific risk be diversified away by investing in both GD Entertainment and Marriot Vacations 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 GD Entertainment and Marriot Vacations into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GD Entertainment Technology and Marriot Vacations Worldwide, you can compare the effects of market volatilities on GD Entertainment and Marriot Vacations 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 GD Entertainment with a short position of Marriot Vacations. Check out your portfolio center. Please also check ongoing floating volatility patterns of GD Entertainment and Marriot Vacations.

Diversification Opportunities for GD Entertainment and Marriot Vacations

-0.25

Correlation Coefficient

GD Entertainment  Marriot Vacations

Very good diversification

The 3 months correlation between GDET and Marriot is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding GD Entertainment Technology and Marriot Vacations Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriot Vacations and GD Entertainment 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 GD Entertainment Technology are associated (or correlated) with Marriot Vacations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marriot Vacations has no effect on the direction of GD Entertainment i.e., GD Entertainment and Marriot Vacations go up and down completely randomly.

Pair Corralation between GD Entertainment and Marriot Vacations

If you would invest  0.01  in GD Entertainment Technology on March 9, 2024 and sell it today you would earn a total of  0.00  from holding GD Entertainment Technology or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GD Entertainment Technology  vs.  Marriot Vacations Worldwide

GD Entertainment Tec

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in GD Entertainment Technology are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, GD Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Marriot Vacations

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marriot Vacations Worldwide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Marriot Vacations is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GD Entertainment and Marriot Vacations

The main advantage of trading using opposite GD Entertainment and Marriot Vacations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GD Entertainment position performs unexpectedly, Marriot Vacations 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 Marriot Vacations will offset losses from the drop in Marriot Vacations' long position.

The idea behind GD Entertainment Technology and Marriot Vacations Worldwide 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.