Correlation Between American Eagle and MELIA HOTELS
Can any of the company-specific risk be diversified away by investing in both American Eagle 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 American Eagle and MELIA HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Eagle Outfitters and MELIA HOTELS, you can compare the effects of market volatilities on American Eagle 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 American Eagle with a short position of MELIA HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and MELIA HOTELS.
Diversification Opportunities for American Eagle and MELIA HOTELS
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and MELIA is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and MELIA HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MELIA HOTELS and American Eagle 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 American Eagle Outfitters 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 American Eagle i.e., American Eagle and MELIA HOTELS go up and down completely randomly.
Pair Corralation between American Eagle and MELIA HOTELS
Assuming the 90 days trading horizon American Eagle Outfitters is expected to under-perform the MELIA HOTELS. In addition to that, American Eagle is 1.48 times more volatile than MELIA HOTELS. It trades about -0.11 of its total potential returns per unit of risk. MELIA HOTELS is currently generating about 0.14 per unit of volatility. If you would invest 660.00 in MELIA HOTELS on August 30, 2024 and sell it today you would earn a total of 27.00 from holding MELIA HOTELS or generate 4.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. MELIA HOTELS
Performance |
| Timeline |
| American Eagle Outfitters |
| MELIA HOTELS |
American Eagle and MELIA HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and MELIA HOTELS
The main advantage of trading using opposite American Eagle and MELIA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle 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.| American Eagle vs. PARKEN Sport Entertainment | American Eagle vs. Scandinavian Tobacco Group | American Eagle vs. JD SPORTS FASH | American Eagle vs. TOWNSQUARE MEDIA INC |
| MELIA HOTELS vs. Sims Metal Management | MELIA HOTELS vs. PROSIEBENSAT1 MEDIADR4 | MELIA HOTELS vs. CNVISION MEDIA | MELIA HOTELS vs. Waste Management |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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