Correlation Between Melia Hotels and Thor Industries
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Thor Industries 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 Thor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Thor Industries, you can compare the effects of market volatilities on Melia Hotels and Thor Industries 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 Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Thor Industries.
Diversification Opportunities for Melia Hotels and Thor Industries
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Melia and Thor is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries 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 Thor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Industries has no effect on the direction of Melia Hotels i.e., Melia Hotels and Thor Industries go up and down completely randomly.
Pair Corralation between Melia Hotels and Thor Industries
Assuming the 90 days trading horizon Melia Hotels is expected to generate 0.61 times more return on investment than Thor Industries. However, Melia Hotels is 1.65 times less risky than Thor Industries. It trades about 0.2 of its potential returns per unit of risk. Thor Industries is currently generating about -0.1 per unit of risk. If you would invest 707.00 in Melia Hotels on September 20, 2024 and sell it today you would earn a total of 45.00 from holding Melia Hotels or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Melia Hotels vs. Thor Industries
Performance |
| Timeline |
| Melia Hotels |
| Thor Industries |
Melia Hotels and Thor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Thor Industries
The main advantage of trading using opposite Melia Hotels and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Thor Industries 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 Thor Industries will offset losses from the drop in Thor Industries' long position.| Melia Hotels vs. Samsung Electronics Co | Melia Hotels vs. Samsung Electronics Co | Melia Hotels vs. Hyundai Motor | Melia Hotels vs. Reliance Industries Ltd |
| Thor Industries vs. Dalata Hotel Group | Thor Industries vs. bet at home AG | Thor Industries vs. Melia Hotels | Thor Industries vs. Capital Drilling |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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