Correlation Between Melia Hotels and Liontrust Asset
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Liontrust Asset 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 Liontrust Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Liontrust Asset Management, you can compare the effects of market volatilities on Melia Hotels and Liontrust Asset 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 Liontrust Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Liontrust Asset.
Diversification Opportunities for Melia Hotels and Liontrust Asset
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Melia and Liontrust is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Liontrust Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liontrust Asset Mana 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 Liontrust Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liontrust Asset Mana has no effect on the direction of Melia Hotels i.e., Melia Hotels and Liontrust Asset go up and down completely randomly.
Pair Corralation between Melia Hotels and Liontrust Asset
Assuming the 90 days trading horizon Melia Hotels is expected to generate 0.44 times more return on investment than Liontrust Asset. However, Melia Hotels is 2.26 times less risky than Liontrust Asset. It trades about 0.06 of its potential returns per unit of risk. Liontrust Asset Management is currently generating about -0.18 per unit of risk. If you would invest 650.00 in Melia Hotels on September 2, 2024 and sell it today you would earn a total of 27.00 from holding Melia Hotels or generate 4.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melia Hotels vs. Liontrust Asset Management
Performance |
| Timeline |
| Melia Hotels |
| Liontrust Asset Mana |
Melia Hotels and Liontrust Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Liontrust Asset
The main advantage of trading using opposite Melia Hotels and Liontrust Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Liontrust Asset 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 Liontrust Asset will offset losses from the drop in Liontrust Asset's long position.| Melia Hotels vs. Monster Beverage Corp | Melia Hotels vs. PureTech Health plc | Melia Hotels vs. Odfjell Drilling | Melia Hotels vs. Synthomer plc |
| Liontrust Asset vs. Liberty Media Corp | Liontrust Asset vs. Cars Inc | Liontrust Asset vs. Universal Display Corp | Liontrust Asset vs. Flutter Entertainment 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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