Correlation Between Zoom Video and MELIA HOTELS
Can any of the company-specific risk be diversified away by investing in both Zoom Video 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 Zoom Video and MELIA HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zoom Video Communications and MELIA HOTELS, you can compare the effects of market volatilities on Zoom Video 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 Zoom Video with a short position of MELIA HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and MELIA HOTELS.
Diversification Opportunities for Zoom Video and MELIA HOTELS
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zoom and MELIA is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and MELIA HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MELIA HOTELS and Zoom Video 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 Zoom Video Communications 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 Zoom Video i.e., Zoom Video and MELIA HOTELS go up and down completely randomly.
Pair Corralation between Zoom Video and MELIA HOTELS
Assuming the 90 days trading horizon Zoom Video is expected to generate 1.0 times less return on investment than MELIA HOTELS. In addition to that, Zoom Video is 1.06 times more volatile than MELIA HOTELS. It trades about 0.03 of its total potential returns per unit of risk. MELIA HOTELS is currently generating about 0.03 per unit of volatility. If you would invest 596.00 in MELIA HOTELS on November 5, 2024 and sell it today you would earn a total of 118.00 from holding MELIA HOTELS or generate 19.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zoom Video Communications vs. MELIA HOTELS
Performance |
| Timeline |
| Zoom Video Communications |
| MELIA HOTELS |
Zoom Video and MELIA HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and MELIA HOTELS
The main advantage of trading using opposite Zoom Video and MELIA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video 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's long position.| Zoom Video vs. SIVERS SEMICONDUCTORS AB | Zoom Video vs. NorAm Drilling AS | Zoom Video vs. Volkswagen AG | Zoom Video vs. Darden Restaurants |
| MELIA HOTELS vs. Alaska Air Group | MELIA HOTELS vs. SEALED AIR | MELIA HOTELS vs. Ryanair Holdings plc | MELIA HOTELS vs. Altair Engineering |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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