Correlation Between Melia Hotels and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Martin Marietta 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 Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Martin Marietta Materials, you can compare the effects of market volatilities on Melia Hotels and Martin Marietta 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 Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Martin Marietta.
Diversification Opportunities for Melia Hotels and Martin Marietta
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Melia and Martin is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Martin Marietta Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Marietta Materials 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 Martin Marietta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Marietta Materials has no effect on the direction of Melia Hotels i.e., Melia Hotels and Martin Marietta go up and down completely randomly.
Pair Corralation between Melia Hotels and Martin Marietta
Assuming the 90 days trading horizon Melia Hotels is expected to generate 0.62 times more return on investment than Martin Marietta. However, Melia Hotels is 1.62 times less risky than Martin Marietta. It trades about -0.03 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about -0.32 per unit of risk. If you would invest 734.00 in Melia Hotels on October 11, 2024 and sell it today you would lose (6.00) from holding Melia Hotels or give up 0.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.0% |
| Values | Daily Returns |
Melia Hotels vs. Martin Marietta Materials
Performance |
| Timeline |
| Melia Hotels |
| Martin Marietta Materials |
Melia Hotels and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Martin Marietta
The main advantage of trading using opposite Melia Hotels and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Martin Marietta 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 Martin Marietta will offset losses from the drop in Martin Marietta's long position.| Melia Hotels vs. Host Hotels Resorts | Melia Hotels vs. Delta Air Lines | Melia Hotels vs. Live Nation Entertainment | Melia Hotels vs. Wizz Air Holdings |
| Martin Marietta vs. Advanced Medical Solutions | Martin Marietta vs. Charter Communications Cl | Martin Marietta vs. Infrastrutture Wireless Italiane | Martin Marietta vs. Aeorema Communications Plc |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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