Correlation Between Melia Hotels and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Monster Beverage 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 Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Monster Beverage Corp, you can compare the effects of market volatilities on Melia Hotels and Monster Beverage 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 Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Monster Beverage.
Diversification Opportunities for Melia Hotels and Monster Beverage
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Melia and Monster is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Monster Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage Corp 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 Monster Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monster Beverage Corp has no effect on the direction of Melia Hotels i.e., Melia Hotels and Monster Beverage go up and down completely randomly.
Pair Corralation between Melia Hotels and Monster Beverage
Assuming the 90 days trading horizon Melia Hotels is expected to generate 1.17 times more return on investment than Monster Beverage. However, Melia Hotels is 1.17 times more volatile than Monster Beverage Corp. It trades about 0.03 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.01 per unit of risk. If you would invest 624.00 in Melia Hotels on November 28, 2024 and sell it today you would earn a total of 93.00 from holding Melia Hotels or generate 14.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.81% |
| Values | Daily Returns |
Melia Hotels vs. Monster Beverage Corp
Performance |
| Timeline |
| Melia Hotels |
| Monster Beverage Corp |
Melia Hotels and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Monster Beverage
The main advantage of trading using opposite Melia Hotels and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Monster Beverage 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 Monster Beverage will offset losses from the drop in Monster Beverage's long position.| Melia Hotels vs. Various Eateries PLC | Melia Hotels vs. Charter Communications Cl | Melia Hotels vs. Litigation Capital Management | Melia Hotels vs. Elmos Semiconductor SE |
| Monster Beverage vs. Pets at Home | Monster Beverage vs. Tata Steel Limited | Monster Beverage vs. Clean Power Hydrogen | Monster Beverage vs. Iron Mountain |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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