Correlation Between MT Bank and Melia Hotels
Can any of the company-specific risk be diversified away by investing in both MT Bank 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 MT Bank and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MT Bank Corp and Melia Hotels, you can compare the effects of market volatilities on MT Bank 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 MT Bank with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of MT Bank and Melia Hotels.
Diversification Opportunities for MT Bank and Melia Hotels
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between 0JW2 and Melia is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank Corp and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and MT Bank 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 MT Bank Corp 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 MT Bank i.e., MT Bank and Melia Hotels go up and down completely randomly.
Pair Corralation between MT Bank and Melia Hotels
Assuming the 90 days trading horizon MT Bank Corp is expected to generate 2.0 times more return on investment than Melia Hotels. However, MT Bank is 2.0 times more volatile than Melia Hotels. It trades about 0.24 of its potential returns per unit of risk. Melia Hotels is currently generating about 0.11 per unit of risk. If you would invest 17,786 in MT Bank Corp on August 29, 2024 and sell it today you would earn a total of 4,249 from holding MT Bank Corp or generate 23.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MT Bank Corp vs. Melia Hotels
Performance |
| Timeline |
| MT Bank Corp |
| Melia Hotels |
MT Bank and Melia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MT Bank and Melia Hotels
The main advantage of trading using opposite MT Bank and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT Bank 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.| MT Bank vs. Lendinvest PLC | MT Bank vs. Neometals | MT Bank vs. Coor Service Management | MT Bank vs. Albion Technology General |
| Melia Hotels vs. Lendinvest PLC | Melia Hotels vs. Neometals | Melia Hotels vs. Coor Service Management | Melia Hotels vs. Albion Technology General |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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