Correlation Between InterContinental and Meli Hotels
Can any of the company-specific risk be diversified away by investing in both InterContinental 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 InterContinental and Meli Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InterContinental Hotels Group and Meli Hotels International, you can compare the effects of market volatilities on InterContinental 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 InterContinental with a short position of Meli Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Meli Hotels.
Diversification Opportunities for InterContinental and Meli Hotels
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between InterContinental and Meli is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group 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 InterContinental 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 InterContinental Hotels Group 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 InterContinental i.e., InterContinental and Meli Hotels go up and down completely randomly.
Pair Corralation between InterContinental and Meli Hotels
Considering the 90-day investment horizon InterContinental is expected to generate 1.66 times less return on investment than Meli Hotels. But when comparing it to its historical volatility, InterContinental Hotels Group is 2.21 times less risky than Meli Hotels. It trades about 0.29 of its potential returns per unit of risk. Meli Hotels International is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 711.00 in Meli Hotels International on September 13, 2024 and sell it today you would earn a total of 68.00 from holding Meli Hotels International or generate 9.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Meli Hotels International
Performance |
| Timeline |
| InterContinental Hotels |
| Meli Hotels International |
InterContinental and Meli Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Meli Hotels
The main advantage of trading using opposite InterContinental and Meli Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental 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.| InterContinental vs. Yatra Online | InterContinental vs. Despegar Corp | InterContinental vs. Mondee Holdings | InterContinental vs. MakeMyTrip Limited |
| Meli Hotels vs. Marriott International | Meli Hotels vs. Hilton Worldwide Holdings | Meli Hotels vs. InterContinental Hotels Group | Meli Hotels vs. Accor SA |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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