Correlation Between Novavax and Melia Hotels
Can any of the company-specific risk be diversified away by investing in both Novavax and Melia Hotels 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 Novavax and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novavax and Melia Hotels, you can compare the effects of market volatilities on Novavax and Melia Hotels 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 Novavax with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novavax and Melia Hotels.
Diversification Opportunities for Novavax and Melia Hotels
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Novavax and Melia is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Novavax and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and Novavax 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 Novavax are associated (or correlated) with Melia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melia Hotels has no effect on the direction of Novavax i.e., Novavax and Melia Hotels go up and down completely randomly.
Pair Corralation between Novavax and Melia Hotels
Assuming the 90 days trading horizon Novavax is expected to generate 11.79 times more return on investment than Melia Hotels. However, Novavax is 11.79 times more volatile than Melia Hotels. It trades about 0.16 of its potential returns per unit of risk. Melia Hotels is currently generating about 0.07 per unit of risk. If you would invest 847.00 in Novavax on September 13, 2024 and sell it today you would earn a total of 343.00 from holding Novavax or generate 40.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Novavax vs. Melia Hotels
Performance |
| Timeline |
| Novavax |
| Melia Hotels |
Novavax and Melia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novavax and Melia Hotels
The main advantage of trading using opposite Novavax and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novavax position performs unexpectedly, Melia Hotels 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 Melia Hotels will offset losses from the drop in Melia Hotels' long position.| Novavax vs. GoldMining | Novavax vs. Playtech Plc | Novavax vs. Hochschild Mining plc | Novavax vs. Lundin Mining Corp |
| Melia Hotels vs. Silvercorp Metals | Melia Hotels vs. Vienna Insurance Group | Melia Hotels vs. Panther Metals PLC | Melia Hotels vs. Golden Metal Resources |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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