Correlation Between Meliá Hotels and VULCAN MATERIALS
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and VULCAN MATERIALS 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 VULCAN MATERIALS 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 VULCAN MATERIALS, you can compare the effects of market volatilities on Meliá Hotels and VULCAN MATERIALS 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 VULCAN MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and VULCAN MATERIALS.
Diversification Opportunities for Meliá Hotels and VULCAN MATERIALS
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Meliá and VULCAN is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and VULCAN MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VULCAN MATERIALS 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 VULCAN MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VULCAN MATERIALS has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and VULCAN MATERIALS go up and down completely randomly.
Pair Corralation between Meliá Hotels and VULCAN MATERIALS
Assuming the 90 days horizon Meli Hotels International is expected to generate 1.58 times more return on investment than VULCAN MATERIALS. However, Meliá Hotels is 1.58 times more volatile than VULCAN MATERIALS. It trades about 0.04 of its potential returns per unit of risk. VULCAN MATERIALS is currently generating about -0.51 per unit of risk. If you would invest 718.00 in Meli Hotels International on October 12, 2024 and sell it today you would earn a total of 6.00 from holding Meli Hotels International or generate 0.84% 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. VULCAN MATERIALS
Performance |
| Timeline |
| Meli Hotels International |
| VULCAN MATERIALS |
Meliá Hotels and VULCAN MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meliá Hotels and VULCAN MATERIALS
The main advantage of trading using opposite Meliá Hotels and VULCAN MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, VULCAN MATERIALS 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 VULCAN MATERIALS will offset losses from the drop in VULCAN MATERIALS's long position.| Meliá Hotels vs. PRECISION DRILLING P | Meliá Hotels vs. BORR DRILLING NEW | Meliá Hotels vs. Live Nation Entertainment | Meliá Hotels vs. Pembina Pipeline Corp |
| VULCAN MATERIALS vs. NAKED WINES PLC | VULCAN MATERIALS vs. Meli Hotels International | VULCAN MATERIALS vs. INTERCONT HOTELS | VULCAN MATERIALS vs. Playa Hotels Resorts |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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