Correlation Between Melia Hotels and Lendinvest PLC
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Lendinvest PLC 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 Lendinvest PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Lendinvest PLC, you can compare the effects of market volatilities on Melia Hotels and Lendinvest PLC 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 Lendinvest PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Lendinvest PLC.
Diversification Opportunities for Melia Hotels and Lendinvest PLC
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Melia and Lendinvest is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Lendinvest PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendinvest 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 Lendinvest PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendinvest PLC has no effect on the direction of Melia Hotels i.e., Melia Hotels and Lendinvest PLC go up and down completely randomly.
Pair Corralation between Melia Hotels and Lendinvest PLC
Assuming the 90 days trading horizon Melia Hotels is expected to generate 1.06 times less return on investment than Lendinvest PLC. But when comparing it to its historical volatility, Melia Hotels is 1.09 times less risky than Lendinvest PLC. It trades about 0.09 of its potential returns per unit of risk. Lendinvest PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,600 in Lendinvest PLC on August 29, 2024 and sell it today you would earn a total of 50.00 from holding Lendinvest PLC or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Melia Hotels vs. Lendinvest PLC
Performance |
| Timeline |
| Melia Hotels |
| Lendinvest PLC |
Melia Hotels and Lendinvest PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Lendinvest PLC
The main advantage of trading using opposite Melia Hotels and Lendinvest PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Lendinvest PLC 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 Lendinvest PLC will offset losses from the drop in Lendinvest PLC's long position.| Melia Hotels vs. Lendinvest PLC | Melia Hotels vs. Neometals | Melia Hotels vs. Coor Service Management | Melia Hotels vs. Albion Technology General |
| Lendinvest PLC vs. Toyota Motor Corp | Lendinvest PLC vs. Neometals | Lendinvest PLC vs. Coor Service Management | Lendinvest PLC vs. Albion Technology General |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Stocks Directory Find actively traded stocks across global markets | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |