Correlation Between Melia Hotels and Alstria Office
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Alstria Office 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 Alstria Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and alstria office REIT AG, you can compare the effects of market volatilities on Melia Hotels and Alstria Office 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 Alstria Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Alstria Office.
Diversification Opportunities for Melia Hotels and Alstria Office
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Melia and Alstria is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and alstria office REIT AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on alstria office REIT 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 Alstria Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of alstria office REIT has no effect on the direction of Melia Hotels i.e., Melia Hotels and Alstria Office go up and down completely randomly.
Pair Corralation between Melia Hotels and Alstria Office
Assuming the 90 days trading horizon Melia Hotels is expected to generate 1.03 times less return on investment than Alstria Office. But when comparing it to its historical volatility, Melia Hotels is 1.97 times less risky than Alstria Office. It trades about 0.07 of its potential returns per unit of risk. alstria office REIT AG is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 535.00 in alstria office REIT AG on September 20, 2024 and sell it today you would earn a total of 234.00 from holding alstria office REIT AG or generate 43.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melia Hotels vs. alstria office REIT AG
Performance |
| Timeline |
| Melia Hotels |
| alstria office REIT |
Melia Hotels and Alstria Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Alstria Office
The main advantage of trading using opposite Melia Hotels and Alstria Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Alstria Office 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 Alstria Office will offset losses from the drop in Alstria Office's 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 |
| Alstria Office vs. Batm Advanced Communications | Alstria Office vs. MTI Wireless Edge | Alstria Office vs. Infrastrutture Wireless Italiane | Alstria Office vs. Axway Software SA |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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