Correlation Between Melia Hotels and Newmont Corp
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Newmont Corp 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 Newmont Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Newmont Corp, you can compare the effects of market volatilities on Melia Hotels and Newmont Corp 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 Newmont Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Newmont Corp.
Diversification Opportunities for Melia Hotels and Newmont Corp
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Melia and Newmont is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Newmont Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont 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 Newmont Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont Corp has no effect on the direction of Melia Hotels i.e., Melia Hotels and Newmont Corp go up and down completely randomly.
Pair Corralation between Melia Hotels and Newmont Corp
Assuming the 90 days trading horizon Melia Hotels is expected to under-perform the Newmont Corp. But the stock apears to be less risky and, when comparing its historical volatility, Melia Hotels is 1.08 times less risky than Newmont Corp. The stock trades about -0.18 of its potential returns per unit of risk. The Newmont Corp is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest 3,723 in Newmont Corp on October 29, 2024 and sell it today you would earn a total of 511.00 from holding Newmont Corp or generate 13.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melia Hotels vs. Newmont Corp
Performance |
| Timeline |
| Melia Hotels |
| Newmont Corp |
Melia Hotels and Newmont Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Newmont Corp
The main advantage of trading using opposite Melia Hotels and Newmont Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Newmont Corp 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 Newmont Corp will offset losses from the drop in Newmont Corp's long position.| Melia Hotels vs. Home Depot | Melia Hotels vs. Schroders Investment Trusts | Melia Hotels vs. Bankers Investment Trust | Melia Hotels vs. Livermore Investments Group |
| Newmont Corp vs. Vitec Software Group | Newmont Corp vs. Beowulf Mining | Newmont Corp vs. CNH Industrial NV | Newmont Corp vs. Auction Technology Group |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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