Correlation Between Melia Hotels and Ameriprise Financial
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Ameriprise Financial 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 Ameriprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Ameriprise Financial, you can compare the effects of market volatilities on Melia Hotels and Ameriprise Financial 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 Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Ameriprise Financial.
Diversification Opportunities for Melia Hotels and Ameriprise Financial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Melia and Ameriprise is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial 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 Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of Melia Hotels i.e., Melia Hotels and Ameriprise Financial go up and down completely randomly.
Pair Corralation between Melia Hotels and Ameriprise Financial
Assuming the 90 days trading horizon Melia Hotels is expected to generate 3.03 times less return on investment than Ameriprise Financial. But when comparing it to its historical volatility, Melia Hotels is 1.93 times less risky than Ameriprise Financial. It trades about 0.15 of its potential returns per unit of risk. Ameriprise Financial is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 47,564 in Ameriprise Financial on September 3, 2024 and sell it today you would earn a total of 9,833 from holding Ameriprise Financial or generate 20.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.67% |
| Values | Daily Returns |
Melia Hotels vs. Ameriprise Financial
Performance |
| Timeline |
| Melia Hotels |
| Ameriprise Financial |
Melia Hotels and Ameriprise Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Ameriprise Financial
The main advantage of trading using opposite Melia Hotels and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Ameriprise Financial 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 Ameriprise Financial will offset losses from the drop in Ameriprise Financial's long position.| Melia Hotels vs. Catalyst Media Group | Melia Hotels vs. CATLIN GROUP | Melia Hotels vs. Magnora ASA | Melia Hotels vs. RTW Venture Fund |
| Ameriprise Financial vs. Wheaton Precious Metals | Ameriprise Financial vs. Fidelity National Information | Ameriprise Financial vs. Neometals | Ameriprise Financial vs. Ion Beam Applications |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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