Correlation Between Melia Hotels and Regions Financial
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Regions Financial 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 Regions Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Regions Financial Corp, you can compare the effects of market volatilities on Melia Hotels and Regions Financial 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 Regions Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Regions Financial.
Diversification Opportunities for Melia Hotels and Regions Financial
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Melia and Regions is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Regions Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial 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 Regions Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regions Financial Corp has no effect on the direction of Melia Hotels i.e., Melia Hotels and Regions Financial go up and down completely randomly.
Pair Corralation between Melia Hotels and Regions Financial
Assuming the 90 days trading horizon Melia Hotels is expected to generate 2.77 times less return on investment than Regions Financial. But when comparing it to its historical volatility, Melia Hotels is 1.27 times less risky than Regions Financial. It trades about 0.02 of its potential returns per unit of risk. Regions Financial Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,512 in Regions Financial Corp on January 20, 2025 and sell it today you would earn a total of 429.00 from holding Regions Financial Corp or generate 28.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.6% |
| Values | Daily Returns |
Melia Hotels vs. Regions Financial Corp
Performance |
| Timeline |
| Melia Hotels |
| Regions Financial Corp |
Melia Hotels and Regions Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Regions Financial
The main advantage of trading using opposite Melia Hotels and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Regions Financial 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 Regions Financial will offset losses from the drop in Regions Financial's long position.| Melia Hotels vs. Rockfire Resources plc | Melia Hotels vs. Ikigai Ventures | Melia Hotels vs. Falcon Oil Gas | Melia Hotels vs. Pantheon Resources |
| Regions Financial vs. Rockfire Resources plc | Regions Financial vs. Ikigai Ventures | Regions Financial vs. Falcon Oil Gas | Regions Financial vs. Pantheon Resources |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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