Correlation Between Melia Hotels and Delta Air
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Delta Air 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 Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Delta Air Lines, you can compare the effects of market volatilities on Melia Hotels and Delta Air 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 Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Delta Air.
Diversification Opportunities for Melia Hotels and Delta Air
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Melia and Delta is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Delta Air Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Air Lines 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 Delta Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Air Lines has no effect on the direction of Melia Hotels i.e., Melia Hotels and Delta Air go up and down completely randomly.
Pair Corralation between Melia Hotels and Delta Air
Assuming the 90 days trading horizon Melia Hotels is expected to generate 0.95 times more return on investment than Delta Air. However, Melia Hotels is 1.06 times less risky than Delta Air. It trades about 0.19 of its potential returns per unit of risk. Delta Air Lines is currently generating about -0.16 per unit of risk. If you would invest 695.00 in Melia Hotels on September 24, 2024 and sell it today you would earn a total of 50.00 from holding Melia Hotels or generate 7.19% 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. Delta Air Lines
Performance |
| Timeline |
| Melia Hotels |
| Delta Air Lines |
Melia Hotels and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Delta Air
The main advantage of trading using opposite Melia Hotels and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Delta Air 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 Delta Air will offset losses from the drop in Delta Air's long position.| Melia Hotels vs. Uniper SE | Melia Hotels vs. Mulberry Group PLC | Melia Hotels vs. London Security Plc | Melia Hotels vs. Triad Group PLC |
| Delta Air vs. Everyman Media Group | Delta Air vs. National Beverage Corp | Delta Air vs. Monster Beverage Corp | Delta Air vs. Liontrust Asset Management |
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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