Correlation Between Melia Hotels and Dotdigital Group
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Dotdigital Group 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 Dotdigital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Dotdigital Group Plc, you can compare the effects of market volatilities on Melia Hotels and Dotdigital Group 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 Dotdigital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Dotdigital Group.
Diversification Opportunities for Melia Hotels and Dotdigital Group
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Melia and Dotdigital is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Dotdigital Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dotdigital Group Plc 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 Dotdigital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dotdigital Group Plc has no effect on the direction of Melia Hotels i.e., Melia Hotels and Dotdigital Group go up and down completely randomly.
Pair Corralation between Melia Hotels and Dotdigital Group
Assuming the 90 days trading horizon Melia Hotels is expected to generate 0.68 times more return on investment than Dotdigital Group. However, Melia Hotels is 1.48 times less risky than Dotdigital Group. It trades about 0.07 of its potential returns per unit of risk. Dotdigital Group Plc is currently generating about 0.02 per unit of risk. If you would invest 461.00 in Melia Hotels on September 14, 2024 and sell it today you would earn a total of 292.00 from holding Melia Hotels or generate 63.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melia Hotels vs. Dotdigital Group Plc
Performance |
| Timeline |
| Melia Hotels |
| Dotdigital Group Plc |
Melia Hotels and Dotdigital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Dotdigital Group
The main advantage of trading using opposite Melia Hotels and Dotdigital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Dotdigital Group 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 Dotdigital Group will offset losses from the drop in Dotdigital Group'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 |
| Dotdigital Group vs. Melia Hotels | Dotdigital Group vs. AMG Advanced Metallurgical | Dotdigital Group vs. Dalata Hotel Group | Dotdigital Group vs. Metals Exploration Plc |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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