Correlation Between Meliá Hotels and RenaissanceRe Holdings
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and RenaissanceRe Holdings 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 Meliá Hotels and RenaissanceRe Holdings 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 RenaissanceRe Holdings, you can compare the effects of market volatilities on Meliá Hotels and RenaissanceRe Holdings 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 Meliá Hotels with a short position of RenaissanceRe Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and RenaissanceRe Holdings.
Diversification Opportunities for Meliá Hotels and RenaissanceRe Holdings
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meliá and RenaissanceRe is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and RenaissanceRe Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RenaissanceRe Holdings and Meliá 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 RenaissanceRe Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RenaissanceRe Holdings has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and RenaissanceRe Holdings go up and down completely randomly.
Pair Corralation between Meliá Hotels and RenaissanceRe Holdings
Assuming the 90 days horizon Meli Hotels International is expected to generate 0.94 times more return on investment than RenaissanceRe Holdings. However, Meli Hotels International is 1.07 times less risky than RenaissanceRe Holdings. It trades about 0.03 of its potential returns per unit of risk. RenaissanceRe Holdings is currently generating about 0.02 per unit of risk. If you would invest 601.00 in Meli Hotels International on November 5, 2024 and sell it today you would earn a total of 112.00 from holding Meli Hotels International or generate 18.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meli Hotels International vs. RenaissanceRe Holdings
Performance |
| Timeline |
| Meli Hotels International |
| RenaissanceRe Holdings |
Meliá Hotels and RenaissanceRe Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meliá Hotels and RenaissanceRe Holdings
The main advantage of trading using opposite Meliá Hotels and RenaissanceRe Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, RenaissanceRe Holdings 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 RenaissanceRe Holdings will offset losses from the drop in RenaissanceRe Holdings' long position.| Meliá Hotels vs. ATRESMEDIA | Meliá Hotels vs. PENN NATL GAMING | Meliá Hotels vs. Townsquare Media | Meliá Hotels vs. Universal Entertainment |
| RenaissanceRe Holdings vs. BJs Wholesale Club | RenaissanceRe Holdings vs. COSTCO WHOLESALE CDR | RenaissanceRe Holdings vs. Ross Stores | RenaissanceRe Holdings vs. Fast Retailing Co |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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