Correlation Between Marriott International and Meliá Hotels
Can any of the company-specific risk be diversified away by investing in both Marriott International 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 Marriott International and Meliá 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 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 Marriott International with a short position of Meliá Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marriott International and Meliá Hotels.
Diversification Opportunities for Marriott International and Meliá Hotels
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marriott and Meliá is 0.77. 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 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 Marriott International i.e., Marriott International and Meliá Hotels go up and down completely randomly.
Pair Corralation between Marriott International and Meliá Hotels
Assuming the 90 days horizon Marriott International is expected to generate 0.84 times more return on investment than Meliá Hotels. However, Marriott International is 1.19 times less risky than Meliá Hotels. It trades about 0.09 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 14,446 in Marriott International on October 9, 2024 and sell it today you would earn a total of 12,189 from holding Marriott International or generate 84.38% 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 Meliá Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marriott International and Meliá Hotels
The main advantage of trading using opposite Marriott International and Meliá Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marriott International 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.| Marriott International vs. Hyatt Hotels | Marriott International vs. InterContinental Hotels Group | Marriott International vs. INTERCONT HOTELS | Marriott International vs. Wyndham Hotels Resorts |
| Meliá Hotels vs. Ares Management Corp | Meliá Hotels vs. Molson Coors Beverage | Meliá Hotels vs. Fevertree Drinks PLC | Meliá Hotels vs. Jupiter Fund Management |
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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