Correlation Between Marriott International and Meli Hotels
Can any of the company-specific risk be diversified away by investing in both Marriott International 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 Marriott International and Meli Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marriott International and Meli Hotels International, you can compare the effects of market volatilities on Marriott International 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 Marriott International with a short position of Meli Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marriott International and Meli Hotels.
Diversification Opportunities for Marriott International and Meli Hotels
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marriott and Meli is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Marriott International 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 Marriott International 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 Marriott International 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 Marriott International i.e., Marriott International and Meli Hotels go up and down completely randomly.
Pair Corralation between Marriott International and Meli Hotels
Assuming the 90 days horizon Marriott International is expected to generate 0.81 times more return on investment than Meli Hotels. However, Marriott International is 1.24 times less risky than Meli Hotels. It trades about 0.09 of its potential returns per unit of risk. Meli Hotels International is currently generating about 0.06 per unit of risk. If you would invest 18,339 in Marriott International on September 26, 2024 and sell it today you would earn a total of 8,371 from holding Marriott International or generate 45.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marriott International vs. Meli Hotels International
Performance |
| Timeline |
| Marriott International |
| Meli Hotels International |
Marriott International and Meli Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marriott International and Meli Hotels
The main advantage of trading using opposite Marriott International and Meli Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marriott International 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.| Marriott International vs. Hilton Worldwide Holdings | Marriott International vs. H World Group | Marriott International vs. Hyatt Hotels | Marriott International vs. InterContinental Hotels Group |
| Meli Hotels vs. Marriott International | Meli Hotels vs. Hilton Worldwide Holdings | Meli Hotels vs. H World Group | Meli Hotels vs. Hyatt Hotels |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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