Correlation Between ENCE Energa and Melia Hotels
Can any of the company-specific risk be diversified away by investing in both ENCE Energa 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 ENCE Energa and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENCE Energa y and Melia Hotels, you can compare the effects of market volatilities on ENCE Energa 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 ENCE Energa with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENCE Energa and Melia Hotels.
Diversification Opportunities for ENCE Energa and Melia Hotels
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ENCE and Melia is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding ENCE Energa y and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and ENCE Energa 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 ENCE Energa y 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 ENCE Energa i.e., ENCE Energa and Melia Hotels go up and down completely randomly.
Pair Corralation between ENCE Energa and Melia Hotels
Assuming the 90 days trading horizon ENCE Energa is expected to generate 9.15 times less return on investment than Melia Hotels. In addition to that, ENCE Energa is 1.36 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 0.1 per unit of volatility. If you would invest 674.00 in Melia Hotels on August 28, 2024 and sell it today you would earn a total of 16.00 from holding Melia Hotels or generate 2.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENCE Energa y vs. Melia Hotels
Performance |
| Timeline |
| ENCE Energa y |
| Melia Hotels |
ENCE Energa and Melia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENCE Energa and Melia Hotels
The main advantage of trading using opposite ENCE Energa and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENCE Energa 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.| ENCE Energa vs. ACS Actividades de | ENCE Energa vs. ArcelorMittal SA | ENCE Energa vs. Mapfre | ENCE Energa vs. Ferrovial |
| Melia Hotels vs. International Consolidated Airlines | Melia Hotels vs. Merlin Properties SOCIMI | Melia Hotels vs. Aena SA | Melia Hotels vs. Acerinox |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |