Correlation Between Melia Hotels and Trainline Plc
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Trainline 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 Trainline 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 Trainline Plc, you can compare the effects of market volatilities on Melia Hotels and Trainline 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 Trainline Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Trainline Plc.
Diversification Opportunities for Melia Hotels and Trainline Plc
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Melia and Trainline is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Trainline Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trainline 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 Trainline Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trainline Plc has no effect on the direction of Melia Hotels i.e., Melia Hotels and Trainline Plc go up and down completely randomly.
Pair Corralation between Melia Hotels and Trainline Plc
Assuming the 90 days trading horizon Melia Hotels is expected to generate 0.44 times more return on investment than Trainline Plc. However, Melia Hotels is 2.29 times less risky than Trainline Plc. It trades about 0.0 of its potential returns per unit of risk. Trainline Plc is currently generating about -0.19 per unit of risk. If you would invest 731.00 in Melia Hotels on November 7, 2024 and sell it today you would lose (2.00) from holding Melia Hotels or give up 0.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melia Hotels vs. Trainline Plc
Performance |
| Timeline |
| Melia Hotels |
| Trainline Plc |
Melia Hotels and Trainline Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Trainline Plc
The main advantage of trading using opposite Melia Hotels and Trainline Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Trainline 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 Trainline Plc will offset losses from the drop in Trainline Plc's long position.| Melia Hotels vs. MG Credit Income | Melia Hotels vs. Zurich Insurance Group | Melia Hotels vs. Berner Kantonalbank AG | Melia Hotels vs. Metro Bank PLC |
| Trainline Plc vs. Silvercorp Metals | Trainline Plc vs. European Metals Holdings | Trainline Plc vs. Qurate Retail Series | Trainline Plc vs. Power Metal Resources |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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