Correlation Between Melia Hotels and Iron Mountain
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Iron Mountain 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 Iron Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Iron Mountain, you can compare the effects of market volatilities on Melia Hotels and Iron Mountain 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 Iron Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Iron Mountain.
Diversification Opportunities for Melia Hotels and Iron Mountain
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Melia and Iron is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Iron Mountain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Mountain 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 Iron Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Mountain has no effect on the direction of Melia Hotels i.e., Melia Hotels and Iron Mountain go up and down completely randomly.
Pair Corralation between Melia Hotels and Iron Mountain
Assuming the 90 days trading horizon Melia Hotels is expected to generate 2.51 times less return on investment than Iron Mountain. But when comparing it to its historical volatility, Melia Hotels is 1.03 times less risky than Iron Mountain. It trades about 0.04 of its potential returns per unit of risk. Iron Mountain is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,891 in Iron Mountain on December 1, 2024 and sell it today you would earn a total of 4,478 from holding Iron Mountain or generate 91.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.99% |
| Values | Daily Returns |
Melia Hotels vs. Iron Mountain
Performance |
| Timeline |
| Melia Hotels |
| Iron Mountain |
Melia Hotels and Iron Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Iron Mountain
The main advantage of trading using opposite Melia Hotels and Iron Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Iron Mountain 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 Iron Mountain will offset losses from the drop in Iron Mountain's long position.| Melia Hotels vs. Concurrent Technologies Plc | Melia Hotels vs. Light Science Technologies | Melia Hotels vs. STMicroelectronics NV | Melia Hotels vs. Spotify Technology SA |
| Iron Mountain vs. Griffin Mining | Iron Mountain vs. Axfood AB | Iron Mountain vs. Clean Power Hydrogen | Iron Mountain vs. Hilton Food Group |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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