Correlation Between Melia Hotels and ITM Power
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and ITM Power 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 ITM Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and ITM Power, you can compare the effects of market volatilities on Melia Hotels and ITM Power 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 ITM Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and ITM Power.
Diversification Opportunities for Melia Hotels and ITM Power
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Melia and ITM is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and ITM Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Power 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 ITM Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Power has no effect on the direction of Melia Hotels i.e., Melia Hotels and ITM Power go up and down completely randomly.
Pair Corralation between Melia Hotels and ITM Power
Assuming the 90 days trading horizon Melia Hotels is expected to generate 0.44 times more return on investment than ITM Power. However, Melia Hotels is 2.26 times less risky than ITM Power. It trades about 0.07 of its potential returns per unit of risk. ITM Power is currently generating about -0.03 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melia Hotels vs. ITM Power
Performance |
| Timeline |
| Melia Hotels |
| ITM Power |
Melia Hotels and ITM Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and ITM Power
The main advantage of trading using opposite Melia Hotels and ITM Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, ITM Power 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 ITM Power will offset losses from the drop in ITM Power'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 |
| ITM Power vs. Bytes Technology | ITM Power vs. Melia Hotels | ITM Power vs. Sabien Technology Group | ITM Power vs. Wyndham Hotels Resorts |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |