Correlation Between Check Point and Melia Hotels
Can any of the company-specific risk be diversified away by investing in both Check Point 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 Check Point and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Check Point Software and Melia Hotels, you can compare the effects of market volatilities on Check Point 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 Check Point with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Melia Hotels.
Diversification Opportunities for Check Point and Melia Hotels
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Check and Melia is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and Check Point 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 Check Point Software 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 Check Point i.e., Check Point and Melia Hotels go up and down completely randomly.
Pair Corralation between Check Point and Melia Hotels
Assuming the 90 days trading horizon Check Point Software is expected to generate 0.89 times more return on investment than Melia Hotels. However, Check Point Software is 1.12 times less risky than Melia Hotels. It trades about 0.21 of its potential returns per unit of risk. Melia Hotels is currently generating about 0.1 per unit of risk. If you would invest 17,908 in Check Point Software on September 14, 2024 and sell it today you would earn a total of 1,057 from holding Check Point Software or generate 5.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Check Point Software vs. Melia Hotels
Performance |
| Timeline |
| Check Point Software |
| Melia Hotels |
Check Point and Melia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Melia Hotels
The main advantage of trading using opposite Check Point and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point 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.| Check Point vs. Trainline Plc | Check Point vs. Charter Communications Cl | Check Point vs. Roadside Real Estate | Check Point vs. Kaufman Et Broad |
| Melia Hotels vs. Silvercorp Metals | Melia Hotels vs. Gaztransport et Technigaz | Melia Hotels vs. Evolution Gaming Group | Melia Hotels vs. Wheaton Precious Metals |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
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| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
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