Correlation Between Meli Hotels and SEALED AIR
Can any of the company-specific risk be diversified away by investing in both Meli Hotels and SEALED AIR 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 SEALED AIR 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 SEALED AIR , you can compare the effects of market volatilities on Meli Hotels and SEALED AIR 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 SEALED AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meli Hotels and SEALED AIR.
Diversification Opportunities for Meli Hotels and SEALED AIR
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Meli and SEALED is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and SEALED AIR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEALED AIR 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 SEALED AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEALED AIR has no effect on the direction of Meli Hotels i.e., Meli Hotels and SEALED AIR go up and down completely randomly.
Pair Corralation between Meli Hotels and SEALED AIR
Assuming the 90 days horizon Meli Hotels International is expected to generate 1.4 times more return on investment than SEALED AIR. However, Meli Hotels is 1.4 times more volatile than SEALED AIR . It trades about 0.18 of its potential returns per unit of risk. SEALED AIR is currently generating about -0.2 per unit of risk. If you would invest 689.00 in Meli Hotels International on September 25, 2024 and sell it today you would earn a total of 51.00 from holding Meli Hotels International or generate 7.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meli Hotels International vs. SEALED AIR
Performance |
| Timeline |
| Meli Hotels International |
| SEALED AIR |
Meli Hotels and SEALED AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meli Hotels and SEALED AIR
The main advantage of trading using opposite Meli Hotels and SEALED AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meli Hotels position performs unexpectedly, SEALED AIR 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 SEALED AIR will offset losses from the drop in SEALED AIR's long position.| 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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