Correlation Between Melia Hotels and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Cardinal Health 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 Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Cardinal Health, you can compare the effects of market volatilities on Melia Hotels and Cardinal Health 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 Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Cardinal Health.
Diversification Opportunities for Melia Hotels and Cardinal Health
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Melia and Cardinal is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health 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 Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of Melia Hotels i.e., Melia Hotels and Cardinal Health go up and down completely randomly.
Pair Corralation between Melia Hotels and Cardinal Health
Assuming the 90 days trading horizon Melia Hotels is expected to generate 1.21 times more return on investment than Cardinal Health. However, Melia Hotels is 1.21 times more volatile than Cardinal Health. It trades about 0.09 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.05 per unit of risk. If you would invest 684.00 in Melia Hotels on November 3, 2024 and sell it today you would earn a total of 35.00 from holding Melia Hotels or generate 5.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Melia Hotels vs. Cardinal Health
Performance |
| Timeline |
| Melia Hotels |
| Cardinal Health |
Melia Hotels and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Cardinal Health
The main advantage of trading using opposite Melia Hotels and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Cardinal Health 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 Cardinal Health will offset losses from the drop in Cardinal Health's long position.| Melia Hotels vs. Spirent Communications plc | Melia Hotels vs. Global Net Lease | Melia Hotels vs. Gamma Communications PLC | Melia Hotels vs. Universal Music Group |
| Cardinal Health vs. Ion Beam Applications | Cardinal Health vs. Datalogic | Cardinal Health vs. Teradata Corp | Cardinal Health vs. Public Storage |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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