Correlation Between Catalyst Media and Melia Hotels
Can any of the company-specific risk be diversified away by investing in both Catalyst Media 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 Catalyst Media and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalyst Media Group and Melia Hotels, you can compare the effects of market volatilities on Catalyst Media 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 Catalyst Media with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Media and Melia Hotels.
Diversification Opportunities for Catalyst Media and Melia Hotels
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Catalyst and Melia is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and Catalyst Media 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 Catalyst Media Group 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 Catalyst Media i.e., Catalyst Media and Melia Hotels go up and down completely randomly.
Pair Corralation between Catalyst Media and Melia Hotels
Assuming the 90 days trading horizon Catalyst Media is expected to generate 7.4 times less return on investment than Melia Hotels. In addition to that, Catalyst Media is 2.04 times more volatile than Melia Hotels. It trades about 0.01 of its total potential returns per unit of risk. Melia Hotels is currently generating about 0.15 per unit of volatility. If you would invest 635.00 in Melia Hotels on September 3, 2024 and sell it today you would earn a total of 42.00 from holding Melia Hotels or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalyst Media Group vs. Melia Hotels
Performance |
| Timeline |
| Catalyst Media Group |
| Melia Hotels |
Catalyst Media and Melia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst Media and Melia Hotels
The main advantage of trading using opposite Catalyst Media and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Media 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.| Catalyst Media vs. Smithson Investment Trust | Catalyst Media vs. Kinnevik Investment AB | Catalyst Media vs. New Residential Investment | Catalyst Media vs. The Mercantile Investment |
| Melia Hotels vs. Catalyst Media Group | Melia Hotels vs. CATLIN GROUP | Melia Hotels vs. Magnora ASA | Melia Hotels vs. RTW Venture Fund |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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