Correlation Between Hilton Worldwide and Meli Hotels
Can any of the company-specific risk be diversified away by investing in both Hilton Worldwide 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 Hilton Worldwide and Meli Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hilton Worldwide Holdings and Meli Hotels International, you can compare the effects of market volatilities on Hilton Worldwide 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 Hilton Worldwide with a short position of Meli Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Worldwide and Meli Hotels.
Diversification Opportunities for Hilton Worldwide and Meli Hotels
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hilton and Meli is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Worldwide Holdings 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 Hilton Worldwide 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 Hilton Worldwide Holdings 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 Hilton Worldwide i.e., Hilton Worldwide and Meli Hotels go up and down completely randomly.
Pair Corralation between Hilton Worldwide and Meli Hotels
Assuming the 90 days trading horizon Hilton Worldwide Holdings is expected to generate 0.82 times more return on investment than Meli Hotels. However, Hilton Worldwide Holdings is 1.22 times less risky than Meli Hotels. It trades about 0.09 of its potential returns per unit of risk. Meli Hotels International is currently generating about 0.04 per unit of risk. If you would invest 12,887 in Hilton Worldwide Holdings on September 2, 2024 and sell it today you would earn a total of 10,673 from holding Hilton Worldwide Holdings or generate 82.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hilton Worldwide Holdings vs. Meli Hotels International
Performance |
| Timeline |
| Hilton Worldwide Holdings |
| Meli Hotels International |
Hilton Worldwide and Meli Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hilton Worldwide and Meli Hotels
The main advantage of trading using opposite Hilton Worldwide and Meli Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Worldwide 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.| Hilton Worldwide vs. ON SEMICONDUCTOR | Hilton Worldwide vs. LION ONE METALS | Hilton Worldwide vs. GALENA MINING LTD | Hilton Worldwide vs. ADRIATIC METALS LS 013355 |
| Meli Hotels vs. Chuangs China Investments | Meli Hotels vs. MIRAMAR HOTEL INV | Meli Hotels vs. MHP Hotel AG | Meli Hotels vs. CapitaLand Investment Limited |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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