Correlation Between Melia Hotels and Games Workshop
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Games Workshop 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 Games Workshop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Games Workshop Group, you can compare the effects of market volatilities on Melia Hotels and Games Workshop 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 Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Games Workshop.
Diversification Opportunities for Melia Hotels and Games Workshop
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Melia and Games is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Games Workshop Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Games Workshop Group 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 Games Workshop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Games Workshop Group has no effect on the direction of Melia Hotels i.e., Melia Hotels and Games Workshop go up and down completely randomly.
Pair Corralation between Melia Hotels and Games Workshop
Assuming the 90 days trading horizon Melia Hotels is expected to generate 12.66 times less return on investment than Games Workshop. But when comparing it to its historical volatility, Melia Hotels is 2.45 times less risky than Games Workshop. It trades about 0.04 of its potential returns per unit of risk. Games Workshop Group is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,067,392 in Games Workshop Group on August 30, 2024 and sell it today you would earn a total of 301,608 from holding Games Workshop Group or generate 28.26% 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. Games Workshop Group
Performance |
| Timeline |
| Melia Hotels |
| Games Workshop Group |
Melia Hotels and Games Workshop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Games Workshop
The main advantage of trading using opposite Melia Hotels and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Games Workshop 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 Games Workshop will offset losses from the drop in Games Workshop's long position.| Melia Hotels vs. Tungsten West PLC | Melia Hotels vs. Argo Group Limited | Melia Hotels vs. Hardide PLC | Melia Hotels vs. Versarien PLC |
| Games Workshop vs. Fevertree Drinks Plc | Games Workshop vs. Young Cos Brewery | Games Workshop vs. Pets at Home | Games Workshop vs. Infrastrutture Wireless Italiane |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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