Correlation Between Spirent Communications and MELIA HOTELS
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications and MELIA HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and MELIA HOTELS, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of MELIA HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and MELIA HOTELS.
Diversification Opportunities for Spirent Communications and MELIA HOTELS
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Spirent and MELIA is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and MELIA HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MELIA HOTELS and Spirent Communications 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 Spirent Communications plc 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 Spirent Communications i.e., Spirent Communications and MELIA HOTELS go up and down completely randomly.
Pair Corralation between Spirent Communications and MELIA HOTELS
Assuming the 90 days horizon Spirent Communications plc is expected to under-perform the MELIA HOTELS. In addition to that, Spirent Communications is 2.16 times more volatile than MELIA HOTELS. It trades about -0.1 of its total potential returns per unit of risk. MELIA HOTELS is currently generating about -0.09 per unit of volatility. If you would invest 731.00 in MELIA HOTELS on October 26, 2024 and sell it today you would lose (22.00) from holding MELIA HOTELS or give up 3.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. MELIA HOTELS
Performance |
| Timeline |
| Spirent Communications |
| MELIA HOTELS |
Spirent Communications and MELIA HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and MELIA HOTELS
The main advantage of trading using opposite Spirent Communications and MELIA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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.| Spirent Communications vs. United Utilities Group | Spirent Communications vs. SBM OFFSHORE | Spirent Communications vs. Algonquin Power Utilities | Spirent Communications vs. UNIQA INSURANCE GR |
| MELIA HOTELS vs. Spirent Communications plc | MELIA HOTELS vs. TELECOM ITALIA | MELIA HOTELS vs. Chengdu PUTIAN Telecommunications | MELIA HOTELS vs. Zoom Video Communications |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |