Correlation Between Kontoor Brands and Meliá Hotels
Can any of the company-specific risk be diversified away by investing in both Kontoor Brands 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 Kontoor Brands and Meliá Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kontoor Brands and Meli Hotels International, you can compare the effects of market volatilities on Kontoor Brands 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 Kontoor Brands with a short position of Meliá Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kontoor Brands and Meliá Hotels.
Diversification Opportunities for Kontoor Brands and Meliá Hotels
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kontoor and Meliá is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Kontoor Brands 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 Kontoor Brands 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 Kontoor Brands 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 Kontoor Brands i.e., Kontoor Brands and Meliá Hotels go up and down completely randomly.
Pair Corralation between Kontoor Brands and Meliá Hotels
Considering the 90-day investment horizon Kontoor Brands is expected to generate 1.03 times more return on investment than Meliá Hotels. However, Kontoor Brands is 1.03 times more volatile than Meli Hotels International. It trades about 0.08 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 4,000 in Kontoor Brands on September 3, 2024 and sell it today you would earn a total of 5,178 from holding Kontoor Brands or generate 129.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.98% |
| Values | Daily Returns |
Kontoor Brands vs. Meli Hotels International
Performance |
| Timeline |
| Kontoor Brands |
| Meli Hotels International |
Kontoor Brands and Meliá Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kontoor Brands and Meliá Hotels
The main advantage of trading using opposite Kontoor Brands and Meliá Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kontoor Brands 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.| Kontoor Brands vs. Vince Holding Corp | Kontoor Brands vs. Ermenegildo Zegna NV | Kontoor Brands vs. Columbia Sportswear | Kontoor Brands vs. Gildan Activewear |
| Meliá Hotels vs. Nike Inc | Meliá Hotels vs. Duluth Holdings | Meliá Hotels vs. Kontoor Brands | Meliá Hotels vs. Summit Materials |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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