Correlation Between Grupo Ezentis and Melia Hotels
Can any of the company-specific risk be diversified away by investing in both Grupo Ezentis 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 Grupo Ezentis and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Ezentis SA and Melia Hotels, you can compare the effects of market volatilities on Grupo Ezentis 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 Grupo Ezentis with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Ezentis and Melia Hotels.
Diversification Opportunities for Grupo Ezentis and Melia Hotels
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grupo and Melia is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Ezentis SA and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and Grupo Ezentis 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 Grupo Ezentis SA 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 Grupo Ezentis i.e., Grupo Ezentis and Melia Hotels go up and down completely randomly.
Pair Corralation between Grupo Ezentis and Melia Hotels
Assuming the 90 days trading horizon Grupo Ezentis SA is expected to generate 3.25 times more return on investment than Melia Hotels. However, Grupo Ezentis is 3.25 times more volatile than Melia Hotels. It trades about 0.02 of its potential returns per unit of risk. Melia Hotels is currently generating about -0.03 per unit of risk. If you would invest 11.00 in Grupo Ezentis SA on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Grupo Ezentis SA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Ezentis SA vs. Melia Hotels
Performance |
| Timeline |
| Grupo Ezentis SA |
| Melia Hotels |
Grupo Ezentis and Melia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Ezentis and Melia Hotels
The main advantage of trading using opposite Grupo Ezentis and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Ezentis 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.| Grupo Ezentis vs. Metrovacesa SA | Grupo Ezentis vs. Elecnor SA | Grupo Ezentis vs. Mapfre | Grupo Ezentis vs. Amper SA |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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