Correlation Between Meli Hotels and ELECTRONIC ARTS
Can any of the company-specific risk be diversified away by investing in both Meli Hotels and ELECTRONIC ARTS 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 ELECTRONIC ARTS 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 ELECTRONIC ARTS, you can compare the effects of market volatilities on Meli Hotels and ELECTRONIC ARTS 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 ELECTRONIC ARTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meli Hotels and ELECTRONIC ARTS.
Diversification Opportunities for Meli Hotels and ELECTRONIC ARTS
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Meli and ELECTRONIC is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and ELECTRONIC ARTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECTRONIC ARTS 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 ELECTRONIC ARTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELECTRONIC ARTS has no effect on the direction of Meli Hotels i.e., Meli Hotels and ELECTRONIC ARTS go up and down completely randomly.
Pair Corralation between Meli Hotels and ELECTRONIC ARTS
Assuming the 90 days horizon Meli Hotels International is expected to generate 0.41 times more return on investment than ELECTRONIC ARTS. However, Meli Hotels International is 2.45 times less risky than ELECTRONIC ARTS. It trades about -0.18 of its potential returns per unit of risk. ELECTRONIC ARTS is currently generating about -0.39 per unit of risk. If you would invest 729.00 in Meli Hotels International on October 30, 2024 and sell it today you would lose (34.00) from holding Meli Hotels International or give up 4.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meli Hotels International vs. ELECTRONIC ARTS
Performance |
| Timeline |
| Meli Hotels International |
| ELECTRONIC ARTS |
Meli Hotels and ELECTRONIC ARTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meli Hotels and ELECTRONIC ARTS
The main advantage of trading using opposite Meli Hotels and ELECTRONIC ARTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meli Hotels position performs unexpectedly, ELECTRONIC ARTS 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 ELECTRONIC ARTS will offset losses from the drop in ELECTRONIC ARTS's long position.| Meli Hotels vs. MCEWEN MINING INC | Meli Hotels vs. Entravision Communications | Meli Hotels vs. CARSALESCOM | Meli Hotels vs. GEELY AUTOMOBILE |
| ELECTRONIC ARTS vs. BJs Wholesale Club | ELECTRONIC ARTS vs. SCOTT TECHNOLOGY | ELECTRONIC ARTS vs. H2O Retailing | ELECTRONIC ARTS vs. AEON STORES |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |