Correlation Between Melia Hotels and Check Point
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Check Point 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 Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Check Point Software, you can compare the effects of market volatilities on Melia Hotels and Check Point 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 Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Check Point.
Diversification Opportunities for Melia Hotels and Check Point
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Melia and Check is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Check Point Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Check Point Software 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 Check Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Check Point Software has no effect on the direction of Melia Hotels i.e., Melia Hotels and Check Point go up and down completely randomly.
Pair Corralation between Melia Hotels and Check Point
Assuming the 90 days trading horizon Melia Hotels is expected to generate 1.04 times more return on investment than Check Point. However, Melia Hotels is 1.04 times more volatile than Check Point Software. It trades about 0.07 of its potential returns per unit of risk. Check Point Software is currently generating about 0.08 per unit of risk. If you would invest 566.00 in Melia Hotels on September 14, 2024 and sell it today you would earn a total of 191.00 from holding Melia Hotels or generate 33.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.16% |
| Values | Daily Returns |
Melia Hotels vs. Check Point Software
Performance |
| Timeline |
| Melia Hotels |
| Check Point Software |
Melia Hotels and Check Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Check Point
The main advantage of trading using opposite Melia Hotels and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Check Point 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 Check Point will offset losses from the drop in Check Point's long position.| Melia Hotels vs. Silvercorp Metals | Melia Hotels vs. Gaztransport et Technigaz | Melia Hotels vs. Evolution Gaming Group | Melia Hotels vs. Wheaton Precious Metals |
| Check Point vs. Trainline Plc | Check Point vs. Charter Communications Cl | Check Point vs. Roadside Real Estate | Check Point vs. Kaufman Et Broad |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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