Correlation Between Golden Metal and Melia Hotels
Can any of the company-specific risk be diversified away by investing in both Golden Metal 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 Golden Metal and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Metal Resources and Melia Hotels, you can compare the effects of market volatilities on Golden Metal 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 Golden Metal with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Metal and Melia Hotels.
Diversification Opportunities for Golden Metal and Melia Hotels
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Golden and Melia is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Golden Metal Resources and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and Golden Metal 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 Golden Metal Resources 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 Golden Metal i.e., Golden Metal and Melia Hotels go up and down completely randomly.
Pair Corralation between Golden Metal and Melia Hotels
Assuming the 90 days trading horizon Golden Metal Resources is expected to generate 2.6 times more return on investment than Melia Hotels. However, Golden Metal is 2.6 times more volatile than Melia Hotels. It trades about 0.2 of its potential returns per unit of risk. Melia Hotels is currently generating about -0.1 per unit of risk. If you would invest 2,900 in Golden Metal Resources on November 3, 2024 and sell it today you would earn a total of 400.00 from holding Golden Metal Resources or generate 13.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Metal Resources vs. Melia Hotels
Performance |
| Timeline |
| Golden Metal Resources |
| Melia Hotels |
Golden Metal and Melia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Metal and Melia Hotels
The main advantage of trading using opposite Golden Metal and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Metal 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.| Golden Metal vs. Edinburgh Investment Trust | Golden Metal vs. Molson Coors Beverage | Golden Metal vs. Seraphim Space Investment | Golden Metal vs. Diversified Energy |
| Melia Hotels vs. Spirent Communications plc | Melia Hotels vs. Global Net Lease | Melia Hotels vs. Gamma Communications PLC | Melia Hotels vs. Universal Music Group |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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