Correlation Between Aena SA and Melia Hotels
Can any of the company-specific risk be diversified away by investing in both Aena SA 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 Aena SA and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aena SA and Melia Hotels, you can compare the effects of market volatilities on Aena SA 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 Aena SA with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aena SA and Melia Hotels.
Diversification Opportunities for Aena SA and Melia Hotels
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aena and Melia is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Aena SA and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and Aena SA 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 Aena SA 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 Aena SA i.e., Aena SA and Melia Hotels go up and down completely randomly.
Pair Corralation between Aena SA and Melia Hotels
Assuming the 90 days trading horizon Aena SA is expected to generate 0.73 times more return on investment than Melia Hotels. However, Aena SA is 1.37 times less risky than Melia Hotels. It trades about 0.08 of its potential returns per unit of risk. Melia Hotels is currently generating about 0.03 per unit of risk. If you would invest 13,254 in Aena SA on November 2, 2024 and sell it today you would earn a total of 7,546 from holding Aena SA or generate 56.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aena SA vs. Melia Hotels
Performance |
| Timeline |
| Aena SA |
| Melia Hotels |
Aena SA and Melia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aena SA and Melia Hotels
The main advantage of trading using opposite Aena SA and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aena SA 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.| Aena SA vs. Technomeca Aerospace SA | Aena SA vs. Borges Agricultural Industrial | Aena SA vs. Home Capital Rentals | Aena SA vs. Arrienda Rental Properties |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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