Correlation Between Iron Mountain and Melia Hotels
Can any of the company-specific risk be diversified away by investing in both Iron Mountain 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 Iron Mountain and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Mountain and Melia Hotels, you can compare the effects of market volatilities on Iron Mountain 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 Iron Mountain with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Mountain and Melia Hotels.
Diversification Opportunities for Iron Mountain and Melia Hotels
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Iron and Melia is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Iron Mountain and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and Iron Mountain 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 Iron Mountain 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 Iron Mountain i.e., Iron Mountain and Melia Hotels go up and down completely randomly.
Pair Corralation between Iron Mountain and Melia Hotels
Assuming the 90 days trading horizon Iron Mountain is expected to generate 2.43 times more return on investment than Melia Hotels. However, Iron Mountain is 2.43 times more volatile than Melia Hotels. It trades about 0.01 of its potential returns per unit of risk. Melia Hotels is currently generating about -0.01 per unit of risk. If you would invest 12,520 in Iron Mountain on September 1, 2024 and sell it today you would lose (34.00) from holding Iron Mountain or give up 0.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iron Mountain vs. Melia Hotels
Performance |
| Timeline |
| Iron Mountain |
| Melia Hotels |
Iron Mountain and Melia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iron Mountain and Melia Hotels
The main advantage of trading using opposite Iron Mountain and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Mountain 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.| Iron Mountain vs. Herald Investment Trust | Iron Mountain vs. Odyssean Investment Trust | Iron Mountain vs. JD Sports Fashion | Iron Mountain vs. New Residential Investment |
| Melia Hotels vs. Uniper SE | Melia Hotels vs. Mulberry Group PLC | Melia Hotels vs. London Security Plc | Melia Hotels vs. Triad Group PLC |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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