Correlation Between Meli Hotels and Talanx AG
Can any of the company-specific risk be diversified away by investing in both Meli Hotels and Talanx AG 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 Talanx AG 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 Talanx AG, you can compare the effects of market volatilities on Meli Hotels and Talanx AG 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 Talanx AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meli Hotels and Talanx AG.
Diversification Opportunities for Meli Hotels and Talanx AG
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Meli and Talanx is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG 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 Talanx AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talanx AG has no effect on the direction of Meli Hotels i.e., Meli Hotels and Talanx AG go up and down completely randomly.
Pair Corralation between Meli Hotels and Talanx AG
Assuming the 90 days horizon Meli Hotels International is expected to generate 2.24 times more return on investment than Talanx AG. However, Meli Hotels is 2.24 times more volatile than Talanx AG. It trades about 0.18 of its potential returns per unit of risk. Talanx AG is currently generating about 0.21 per unit of risk. If you would invest 679.00 in Meli Hotels International on November 18, 2024 and sell it today you would earn a total of 45.00 from holding Meli Hotels International or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meli Hotels International vs. Talanx AG
Performance |
| Timeline |
| Meli Hotels International |
| Talanx AG |
Meli Hotels and Talanx AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meli Hotels and Talanx AG
The main advantage of trading using opposite Meli Hotels and Talanx AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meli Hotels position performs unexpectedly, Talanx AG 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 Talanx AG will offset losses from the drop in Talanx AG's long position.| Meli Hotels vs. CITIC Telecom International | Meli Hotels vs. Martin Marietta Materials | Meli Hotels vs. Rayonier Advanced Materials | Meli Hotels vs. Plastic Omnium |
| Talanx AG vs. MYFAIR GOLD P | Talanx AG vs. SEALED AIR | Talanx AG vs. GUILD ESPORTS PLC | Talanx AG vs. NORWEGIAN AIR SHUT |
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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