Correlation Between Meli Hotels and Bridgestone
Can any of the company-specific risk be diversified away by investing in both Meli Hotels and Bridgestone 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 Meli Hotels and Bridgestone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meli Hotels International and Bridgestone, you can compare the effects of market volatilities on Meli Hotels and Bridgestone 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 Meli Hotels with a short position of Bridgestone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meli Hotels and Bridgestone.
Diversification Opportunities for Meli Hotels and Bridgestone
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Meli and Bridgestone is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Bridgestone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgestone and Meli Hotels 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 Meli Hotels International are associated (or correlated) with Bridgestone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgestone has no effect on the direction of Meli Hotels i.e., Meli Hotels and Bridgestone go up and down completely randomly.
Pair Corralation between Meli Hotels and Bridgestone
Assuming the 90 days horizon Meli Hotels International is expected to under-perform the Bridgestone. In addition to that, Meli Hotels is 1.77 times more volatile than Bridgestone. It trades about 0.0 of its total potential returns per unit of risk. Bridgestone is currently generating about 0.0 per unit of volatility. If you would invest 1,600 in Bridgestone on September 14, 2024 and sell it today you would earn a total of 0.00 from holding Bridgestone or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meli Hotels International vs. Bridgestone
Performance |
| Timeline |
| Meli Hotels International |
| Bridgestone |
Meli Hotels and Bridgestone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meli Hotels and Bridgestone
The main advantage of trading using opposite Meli Hotels and Bridgestone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meli Hotels position performs unexpectedly, Bridgestone 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 Bridgestone will offset losses from the drop in Bridgestone's long position.| Meli Hotels vs. Hyatt Hotels | Meli Hotels vs. InterContinental Hotels Group | Meli Hotels vs. INTERCONT HOTELS | Meli Hotels vs. Wyndham Hotels Resorts |
| Bridgestone vs. Highlight Communications AG | Bridgestone vs. Tower One Wireless | Bridgestone vs. NEWELL RUBBERMAID | Bridgestone vs. Consolidated Communications Holdings |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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