Correlation Between ALLIANZ SE and MELIA HOTELS
Can any of the company-specific risk be diversified away by investing in both ALLIANZ SE 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 ALLIANZ SE and MELIA HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALLIANZ SE UNSPADR and MELIA HOTELS, you can compare the effects of market volatilities on ALLIANZ SE 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 ALLIANZ SE with a short position of MELIA HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALLIANZ SE and MELIA HOTELS.
Diversification Opportunities for ALLIANZ SE and MELIA HOTELS
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between ALLIANZ and MELIA is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding ALLIANZ SE UNSPADR and MELIA HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MELIA HOTELS and ALLIANZ SE 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 ALLIANZ SE UNSPADR 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 ALLIANZ SE i.e., ALLIANZ SE and MELIA HOTELS go up and down completely randomly.
Pair Corralation between ALLIANZ SE and MELIA HOTELS
Assuming the 90 days trading horizon ALLIANZ SE is expected to generate 40.48 times less return on investment than MELIA HOTELS. But when comparing it to its historical volatility, ALLIANZ SE UNSPADR is 2.4 times less risky than MELIA HOTELS. It trades about 0.0 of its potential returns per unit of risk. MELIA HOTELS is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 672.00 in MELIA HOTELS on September 1, 2024 and sell it today you would earn a total of 14.00 from holding MELIA HOTELS or generate 2.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALLIANZ SE UNSPADR vs. MELIA HOTELS
Performance |
| Timeline |
| ALLIANZ SE UNSPADR |
| MELIA HOTELS |
ALLIANZ SE and MELIA HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALLIANZ SE and MELIA HOTELS
The main advantage of trading using opposite ALLIANZ SE and MELIA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALLIANZ SE 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.| ALLIANZ SE vs. MELIA HOTELS | ALLIANZ SE vs. Hyatt Hotels | ALLIANZ SE vs. MHP Hotel AG | ALLIANZ SE vs. INTERCONT HOTELS |
| MELIA HOTELS vs. SIVERS SEMICONDUCTORS AB | MELIA HOTELS vs. Darden Restaurants | MELIA HOTELS vs. Reliance Steel Aluminum | MELIA HOTELS vs. Q2M Managementberatung AG |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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