Correlation Between Livermore Investments and Melia Hotels
Can any of the company-specific risk be diversified away by investing in both Livermore Investments and Melia 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 Livermore Investments and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Livermore Investments Group and Melia Hotels, you can compare the effects of market volatilities on Livermore Investments and Melia 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 Livermore Investments with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Livermore Investments and Melia Hotels.
Diversification Opportunities for Livermore Investments and Melia Hotels
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Livermore and Melia is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Livermore Investments Group and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and Livermore Investments 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 Livermore Investments Group are associated (or correlated) with Melia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melia Hotels has no effect on the direction of Livermore Investments i.e., Livermore Investments and Melia Hotels go up and down completely randomly.
Pair Corralation between Livermore Investments and Melia Hotels
Assuming the 90 days trading horizon Livermore Investments Group is expected to generate 1.1 times more return on investment than Melia Hotels. However, Livermore Investments is 1.1 times more volatile than Melia Hotels. It trades about 0.42 of its potential returns per unit of risk. Melia Hotels is currently generating about -0.17 per unit of risk. If you would invest 5,110 in Livermore Investments Group on October 30, 2024 and sell it today you would earn a total of 615.00 from holding Livermore Investments Group or generate 12.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Livermore Investments Group vs. Melia Hotels
Performance |
| Timeline |
| Livermore Investments |
| Melia Hotels |
Livermore Investments and Melia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Livermore Investments and Melia Hotels
The main advantage of trading using opposite Livermore Investments and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Livermore Investments position performs unexpectedly, Melia 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 Melia Hotels will offset losses from the drop in Melia Hotels' long position.| Livermore Investments vs. SupplyMe Capital PLC | Livermore Investments vs. Premier African Minerals | Livermore Investments vs. SANTANDER UK 8 | Livermore Investments vs. Tower Resources plc |
| Melia Hotels vs. Cembra Money Bank | Melia Hotels vs. MoneysupermarketCom Group PLC | Melia Hotels vs. Batm Advanced Communications | Melia Hotels vs. Spirent Communications plc |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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