Correlation Between Alstria Office and Melia Hotels
Can any of the company-specific risk be diversified away by investing in both Alstria Office and Melia Hotels 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 Alstria Office and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between alstria office REIT AG and Melia Hotels, you can compare the effects of market volatilities on Alstria Office and Melia Hotels 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 Alstria Office with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alstria Office and Melia Hotels.
Diversification Opportunities for Alstria Office and Melia Hotels
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alstria and Melia is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding alstria office REIT AG and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and Alstria Office 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 alstria office REIT AG are associated (or correlated) with Melia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melia Hotels has no effect on the direction of Alstria Office i.e., Alstria Office and Melia Hotels go up and down completely randomly.
Pair Corralation between Alstria Office and Melia Hotels
Assuming the 90 days trading horizon alstria office REIT AG is expected to generate 0.4 times more return on investment than Melia Hotels. However, alstria office REIT AG is 2.47 times less risky than Melia Hotels. It trades about 0.13 of its potential returns per unit of risk. Melia Hotels is currently generating about -0.05 per unit of risk. If you would invest 535.00 in alstria office REIT AG on December 11, 2024 and sell it today you would earn a total of 20.00 from holding alstria office REIT AG or generate 3.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
alstria office REIT AG vs. Melia Hotels
Performance |
| Timeline |
| alstria office REIT |
| Melia Hotels |
Alstria Office and Melia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alstria Office and Melia Hotels
The main advantage of trading using opposite Alstria Office and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alstria Office position performs unexpectedly, Melia Hotels 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 Melia Hotels will offset losses from the drop in Melia Hotels' long position.| Alstria Office vs. Derwent London PLC | Alstria Office vs. Hammerson PLC | Alstria Office vs. Supermarket Income REIT | Alstria Office vs. Workspace Group PLC |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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