Correlation Between Marriott International and Cytokinetics

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Can any of the company-specific risk be diversified away by investing in both Marriott International and Cytokinetics 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 Cytokinetics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marriott International and Cytokinetics, you can compare the effects of market volatilities on Marriott International and Cytokinetics 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 Cytokinetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marriott International and Cytokinetics.

Diversification Opportunities for Marriott International and Cytokinetics

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between Marriott and Cytokinetics is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Marriott International and Cytokinetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cytokinetics 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 Cytokinetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cytokinetics has no effect on the direction of Marriott International i.e., Marriott International and Cytokinetics go up and down completely randomly.

Pair Corralation between Marriott International and Cytokinetics

Considering the 90-day investment horizon Marriott International is expected to generate 1.83 times less return on investment than Cytokinetics. But when comparing it to its historical volatility, Marriott International is 1.7 times less risky than Cytokinetics. It trades about 0.02 of its potential returns per unit of risk. Cytokinetics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,647  in Cytokinetics on September 8, 2022 and sell it today you would earn a total of  53.00  from holding Cytokinetics or generate 1.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Marriott International  vs.  Cytokinetics

 Performance (%) 
       Timeline  
Marriott International 
Marriott Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Marriott International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Marriott International is not utilizing all of its potentials. The new stock price agitation, may contribute to short-term losses for the retail investors.

Marriott Price Channel

Cytokinetics 
Cytokinetics Performance
0 of 100
Over the last 90 days Cytokinetics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2023. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Cytokinetics Price Channel

Marriott International and Cytokinetics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Marriott International and Cytokinetics

The main advantage of trading using opposite Marriott International and Cytokinetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marriott International position performs unexpectedly, Cytokinetics 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 Cytokinetics will offset losses from the drop in Cytokinetics' long position.
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The idea behind Marriott International and Cytokinetics 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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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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