Correlation Between Melia Hotels and Leggett Platt
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Leggett Platt 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 Leggett Platt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Leggett Platt, you can compare the effects of market volatilities on Melia Hotels and Leggett Platt 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 Leggett Platt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Leggett Platt.
Diversification Opportunities for Melia Hotels and Leggett Platt
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Melia and Leggett is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Leggett Platt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggett Platt 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 Leggett Platt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leggett Platt has no effect on the direction of Melia Hotels i.e., Melia Hotels and Leggett Platt go up and down completely randomly.
Pair Corralation between Melia Hotels and Leggett Platt
Assuming the 90 days trading horizon Melia Hotels is expected to generate 0.48 times more return on investment than Leggett Platt. However, Melia Hotels is 2.09 times less risky than Leggett Platt. It trades about 0.11 of its potential returns per unit of risk. Leggett Platt is currently generating about -0.03 per unit of risk. If you would invest 728.00 in Melia Hotels on September 13, 2024 and sell it today you would earn a total of 25.00 from holding Melia Hotels or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melia Hotels vs. Leggett Platt
Performance |
| Timeline |
| Melia Hotels |
| Leggett Platt |
Melia Hotels and Leggett Platt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Leggett Platt
The main advantage of trading using opposite Melia Hotels and Leggett Platt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Leggett Platt 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 Leggett Platt will offset losses from the drop in Leggett Platt's long position.| Melia Hotels vs. Silvercorp Metals | Melia Hotels vs. Gaztransport et Technigaz | Melia Hotels vs. Evolution Gaming Group | Melia Hotels vs. Wheaton Precious Metals |
| Leggett Platt vs. Cognizant Technology Solutions | Leggett Platt vs. Pfeiffer Vacuum Technology | Leggett Platt vs. Albion Technology General | Leggett Platt vs. Spotify Technology SA |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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