Correlation Between Lundin Mining and Melia Hotels
Can any of the company-specific risk be diversified away by investing in both Lundin Mining 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 Lundin Mining and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Mining Corp and Melia Hotels, you can compare the effects of market volatilities on Lundin Mining 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 Lundin Mining with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and Melia Hotels.
Diversification Opportunities for Lundin Mining and Melia Hotels
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lundin and Melia is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining Corp and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and Lundin Mining 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 Lundin Mining Corp 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 Lundin Mining i.e., Lundin Mining and Melia Hotels go up and down completely randomly.
Pair Corralation between Lundin Mining and Melia Hotels
Assuming the 90 days trading horizon Lundin Mining Corp is expected to under-perform the Melia Hotels. In addition to that, Lundin Mining is 1.7 times more volatile than Melia Hotels. It trades about -0.2 of its total potential returns per unit of risk. Melia Hotels is currently generating about -0.1 per unit of volatility. If you would invest 741.00 in Melia Hotels on November 3, 2024 and sell it today you would lose (22.00) from holding Melia Hotels or give up 2.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Mining Corp vs. Melia Hotels
Performance |
| Timeline |
| Lundin Mining Corp |
| Melia Hotels |
Lundin Mining and Melia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Mining and Melia Hotels
The main advantage of trading using opposite Lundin Mining and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining 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.| Lundin Mining vs. Bankers Investment Trust | Lundin Mining vs. Metro Bank PLC | Lundin Mining vs. Southwest Airlines Co | Lundin Mining vs. McEwen Mining |
| Melia Hotels vs. Spirent Communications plc | Melia Hotels vs. Global Net Lease | Melia Hotels vs. Gamma Communications PLC | Melia Hotels vs. Universal Music Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Global Correlations Find global opportunities by holding instruments from different markets |