Correlation Between Host Hotels and Meli Hotels
Can any of the company-specific risk be diversified away by investing in both Host Hotels 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 Host Hotels and Meli Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Host Hotels Resorts and Meli Hotels International, you can compare the effects of market volatilities on Host Hotels 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 Host Hotels with a short position of Meli Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Meli Hotels.
Diversification Opportunities for Host Hotels and Meli Hotels
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Host and Meli is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts 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 Host Hotels 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 Host Hotels Resorts 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 Host Hotels i.e., Host Hotels and Meli Hotels go up and down completely randomly.
Pair Corralation between Host Hotels and Meli Hotels
Assuming the 90 days horizon Host Hotels Resorts is expected to generate 1.51 times more return on investment than Meli Hotels. However, Host Hotels is 1.51 times more volatile than Meli Hotels International. It trades about 0.15 of its potential returns per unit of risk. Meli Hotels International is currently generating about 0.11 per unit of risk. If you would invest 1,610 in Host Hotels Resorts on August 29, 2024 and sell it today you would earn a total of 120.00 from holding Host Hotels Resorts or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Host Hotels Resorts vs. Meli Hotels International
Performance |
| Timeline |
| Host Hotels Resorts |
| Meli Hotels International |
Host Hotels and Meli Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and Meli Hotels
The main advantage of trading using opposite Host Hotels and Meli Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels 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.| Host Hotels vs. VIAPLAY GROUP AB | Host Hotels vs. CVW CLEANTECH INC | Host Hotels vs. COLUMBIA SPORTSWEAR | Host Hotels vs. ANTA SPORTS PRODUCT |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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