Correlation Between Melia Hotels and Leroy Seafood
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Leroy Seafood 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 Melia Hotels and Leroy Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Leroy Seafood Group, you can compare the effects of market volatilities on Melia Hotels and Leroy Seafood 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 Melia Hotels with a short position of Leroy Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Leroy Seafood.
Diversification Opportunities for Melia Hotels and Leroy Seafood
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Melia and Leroy is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Leroy Seafood Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leroy Seafood Group and Melia Hotels 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 Melia Hotels are associated (or correlated) with Leroy Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leroy Seafood Group has no effect on the direction of Melia Hotels i.e., Melia Hotels and Leroy Seafood go up and down completely randomly.
Pair Corralation between Melia Hotels and Leroy Seafood
Assuming the 90 days trading horizon Melia Hotels is expected to generate 0.88 times more return on investment than Leroy Seafood. However, Melia Hotels is 1.14 times less risky than Leroy Seafood. It trades about 0.05 of its potential returns per unit of risk. Leroy Seafood Group is currently generating about 0.02 per unit of risk. If you would invest 485.00 in Melia Hotels on September 2, 2024 and sell it today you would earn a total of 192.00 from holding Melia Hotels or generate 39.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melia Hotels vs. Leroy Seafood Group
Performance |
| Timeline |
| Melia Hotels |
| Leroy Seafood Group |
Melia Hotels and Leroy Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Leroy Seafood
The main advantage of trading using opposite Melia Hotels and Leroy Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Leroy Seafood 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 Leroy Seafood will offset losses from the drop in Leroy Seafood's long position.| Melia Hotels vs. Monster Beverage Corp | Melia Hotels vs. PureTech Health plc | Melia Hotels vs. Odfjell Drilling | Melia Hotels vs. Synthomer plc |
| Leroy Seafood vs. Auto Trader Group | Leroy Seafood vs. Hilton Food Group | Leroy Seafood vs. National Beverage Corp | Leroy Seafood vs. Axfood AB |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Stocks Directory Find actively traded stocks across global markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Commodity Directory Find actively traded commodities issued by global exchanges |