Correlation Between Bt Brands and Meliá Hotels
Can any of the company-specific risk be diversified away by investing in both Bt Brands and Meliá 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 Bt Brands and Meliá Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bt Brands and Meli Hotels International, you can compare the effects of market volatilities on Bt Brands and Meliá 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 Bt Brands with a short position of Meliá Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bt Brands and Meliá Hotels.
Diversification Opportunities for Bt Brands and Meliá Hotels
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BTBD and Meliá is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bt Brands and Meli Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meli Hotels International and Bt Brands 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 Bt Brands are associated (or correlated) with Meliá Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meli Hotels International has no effect on the direction of Bt Brands i.e., Bt Brands and Meliá Hotels go up and down completely randomly.
Pair Corralation between Bt Brands and Meliá Hotels
If you would invest 711.00 in Meli Hotels International on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Meli Hotels International or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bt Brands vs. Meli Hotels International
Performance |
| Timeline |
| Bt Brands |
| Meli Hotels International |
Bt Brands and Meliá Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bt Brands and Meliá Hotels
The main advantage of trading using opposite Bt Brands and Meliá Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bt Brands position performs unexpectedly, Meliá 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 Meliá Hotels will offset losses from the drop in Meliá Hotels' long position.| Bt Brands vs. Alsea SAB de | Bt Brands vs. Marstons PLC | Bt Brands vs. Bagger Daves Burger | Bt Brands vs. Marstons PLC |
| Meliá Hotels vs. Marriott International | Meliá Hotels vs. Hilton Worldwide Holdings | Meliá Hotels vs. InterContinental Hotels Group | Meliá Hotels vs. Accor SA |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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