Correlation Between Melia Hotels and Worldwide Healthcare
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Worldwide Healthcare 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 Worldwide Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Worldwide Healthcare Trust, you can compare the effects of market volatilities on Melia Hotels and Worldwide Healthcare 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 Worldwide Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Worldwide Healthcare.
Diversification Opportunities for Melia Hotels and Worldwide Healthcare
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Melia and Worldwide is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Worldwide Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldwide Healthcare 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 Worldwide Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldwide Healthcare has no effect on the direction of Melia Hotels i.e., Melia Hotels and Worldwide Healthcare go up and down completely randomly.
Pair Corralation between Melia Hotels and Worldwide Healthcare
Assuming the 90 days trading horizon Melia Hotels is expected to under-perform the Worldwide Healthcare. In addition to that, Melia Hotels is 1.62 times more volatile than Worldwide Healthcare Trust. It trades about -0.1 of its total potential returns per unit of risk. Worldwide Healthcare Trust is currently generating about 0.37 per unit of volatility. If you would invest 32,250 in Worldwide Healthcare Trust on November 3, 2024 and sell it today you would earn a total of 2,050 from holding Worldwide Healthcare Trust or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melia Hotels vs. Worldwide Healthcare Trust
Performance |
| Timeline |
| Melia Hotels |
| Worldwide Healthcare |
Melia Hotels and Worldwide Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Worldwide Healthcare
The main advantage of trading using opposite Melia Hotels and Worldwide Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Worldwide Healthcare 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 Worldwide Healthcare will offset losses from the drop in Worldwide Healthcare's long position.| Melia Hotels vs. Spirent Communications plc | Melia Hotels vs. Global Net Lease | Melia Hotels vs. Gamma Communications PLC | Melia Hotels vs. Universal Music Group |
| Worldwide Healthcare vs. Centaur Media | Worldwide Healthcare vs. G5 Entertainment AB | Worldwide Healthcare vs. Hollywood Bowl Group | Worldwide Healthcare vs. One Media iP |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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