Correlation Between Melia Hotels and Sydbank
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Sydbank 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 Sydbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Sydbank, you can compare the effects of market volatilities on Melia Hotels and Sydbank 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 Sydbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Sydbank.
Diversification Opportunities for Melia Hotels and Sydbank
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Melia and Sydbank is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Sydbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank 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 Sydbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank has no effect on the direction of Melia Hotels i.e., Melia Hotels and Sydbank go up and down completely randomly.
Pair Corralation between Melia Hotels and Sydbank
Assuming the 90 days trading horizon Melia Hotels is expected to generate 1.57 times less return on investment than Sydbank. But when comparing it to its historical volatility, Melia Hotels is 1.07 times less risky than Sydbank. It trades about 0.03 of its potential returns per unit of risk. Sydbank is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 26,886 in Sydbank on October 12, 2024 and sell it today you would earn a total of 10,124 from holding Sydbank or generate 37.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melia Hotels vs. Sydbank
Performance |
| Timeline |
| Melia Hotels |
| Sydbank |
Melia Hotels and Sydbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Sydbank
The main advantage of trading using opposite Melia Hotels and Sydbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Sydbank 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 Sydbank will offset losses from the drop in Sydbank's long position.| Melia Hotels vs. MoneysupermarketCom Group PLC | Melia Hotels vs. Sparebank 1 SR | Melia Hotels vs. Erste Group Bank | Melia Hotels vs. Ameriprise Financial |
| Sydbank vs. Fresenius Medical Care | Sydbank vs. Creo Medical Group | Sydbank vs. Medical Properties Trust | Sydbank vs. Advanced Medical Solutions |
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 Stocks Directory module to find actively traded stocks across global markets.
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