Correlation Between Home Depot and Melia Hotels
Can any of the company-specific risk be diversified away by investing in both Home Depot 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 Home Depot and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Melia Hotels, you can compare the effects of market volatilities on Home Depot 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 Home Depot with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Melia Hotels.
Diversification Opportunities for Home Depot and Melia Hotels
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Home and Melia is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and Home Depot 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 Home Depot 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 Home Depot i.e., Home Depot and Melia Hotels go up and down completely randomly.
Pair Corralation between Home Depot and Melia Hotels
If you would invest 17,857 in Home Depot on November 7, 2024 and sell it today you would earn a total of 0.00 from holding Home Depot or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Melia Hotels
Performance |
| Timeline |
| Home Depot |
| Melia Hotels |
Home Depot and Melia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Melia Hotels
The main advantage of trading using opposite Home Depot and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot 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.| Home Depot vs. GoldMining | Home Depot vs. Golden Metal Resources | Home Depot vs. Fulcrum Metals PLC | Home Depot vs. JLEN Environmental Assets |
| Melia Hotels vs. Spirent Communications plc | Melia Hotels vs. Indutrade AB | Melia Hotels vs. Ubisoft Entertainment | Melia Hotels vs. Zoom Video Communications |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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