Correlation Between Summit Hotel and Meliá Hotels
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Meliá 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 Summit Hotel and Meliá Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Hotel Properties and Meli Hotels International, you can compare the effects of market volatilities on Summit Hotel and Meliá 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 Summit Hotel with a short position of Meliá Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Meliá Hotels.
Diversification Opportunities for Summit Hotel and Meliá Hotels
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Summit and Meliá is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties 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 Summit Hotel 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 Summit Hotel Properties are associated (or correlated) with Meliá 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 Summit Hotel i.e., Summit Hotel and Meliá Hotels go up and down completely randomly.
Pair Corralation between Summit Hotel and Meliá Hotels
Considering the 90-day investment horizon Summit Hotel Properties is expected to under-perform the Meliá Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Summit Hotel Properties is 1.11 times less risky than Meliá Hotels. The stock trades about -0.01 of its potential returns per unit of risk. The Meli Hotels International is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 525.00 in Meli Hotels International on August 24, 2024 and sell it today you would earn a total of 186.00 from holding Meli Hotels International or generate 35.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.98% |
| Values | Daily Returns |
Summit Hotel Properties vs. Meli Hotels International
Performance |
| Timeline |
| Summit Hotel Properties |
| Meli Hotels International |
Summit Hotel and Meliá Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Meliá Hotels
The main advantage of trading using opposite Summit Hotel and Meliá Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Meliá 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 Meliá Hotels will offset losses from the drop in Meliá Hotels' long position.| Summit Hotel vs. Diamondrock Hospitality | Summit Hotel vs. RLJ Lodging Trust | Summit Hotel vs. Pebblebrook Hotel Trust | Summit Hotel vs. Sunstone Hotel Investors |
| Meliá Hotels vs. Marriott International | Meliá Hotels vs. Hilton Worldwide Holdings | Meliá Hotels vs. InterContinental Hotels Group | Meliá Hotels vs. InterContinental Hotels 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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