Correlation Between National Retail and Meli Hotels
Can any of the company-specific risk be diversified away by investing in both National Retail and Meli 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 National Retail and Meli Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Retail Properties and Meli Hotels International, you can compare the effects of market volatilities on National Retail and Meli 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 National Retail with a short position of Meli Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and Meli Hotels.
Diversification Opportunities for National Retail and Meli Hotels
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and Meli is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties 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 National Retail 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 National Retail Properties are associated (or correlated) with Meli 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 National Retail i.e., National Retail and Meli Hotels go up and down completely randomly.
Pair Corralation between National Retail and Meli Hotels
Assuming the 90 days trading horizon National Retail Properties is expected to generate 0.78 times more return on investment than Meli Hotels. However, National Retail Properties is 1.28 times less risky than Meli Hotels. It trades about 0.04 of its potential returns per unit of risk. Meli Hotels International is currently generating about -0.02 per unit of risk. If you would invest 3,802 in National Retail Properties on September 12, 2024 and sell it today you would earn a total of 231.00 from holding National Retail Properties or generate 6.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Retail Properties vs. Meli Hotels International
Performance |
| Timeline |
| National Retail Prop |
| Meli Hotels International |
National Retail and Meli Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Retail and Meli Hotels
The main advantage of trading using opposite National Retail and Meli Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail position performs unexpectedly, Meli 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 Meli Hotels will offset losses from the drop in Meli Hotels' long position.| National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc |
| Meli Hotels vs. Hyatt Hotels | Meli Hotels vs. InterContinental Hotels Group | Meli Hotels vs. INTERCONT HOTELS | Meli Hotels vs. Wyndham Hotels Resorts |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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