Correlation Between Melia Hotels and Aena SA
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Aena SA 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 Melia Hotels and Aena SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Aena SA, you can compare the effects of market volatilities on Melia Hotels and Aena SA 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 Melia Hotels with a short position of Aena SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Aena SA.
Diversification Opportunities for Melia Hotels and Aena SA
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Melia and Aena is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Aena SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aena SA and Melia 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 Melia Hotels are associated (or correlated) with Aena SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aena SA has no effect on the direction of Melia Hotels i.e., Melia Hotels and Aena SA go up and down completely randomly.
Pair Corralation between Melia Hotels and Aena SA
Assuming the 90 days trading horizon Melia Hotels is expected to under-perform the Aena SA. In addition to that, Melia Hotels is 1.41 times more volatile than Aena SA. It trades about -0.04 of its total potential returns per unit of risk. Aena SA is currently generating about 0.09 per unit of volatility. If you would invest 17,730 in Aena SA on August 26, 2024 and sell it today you would earn a total of 2,310 from holding Aena SA or generate 13.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melia Hotels vs. Aena SA
Performance |
| Timeline |
| Melia Hotels |
| Aena SA |
Melia Hotels and Aena SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Aena SA
The main advantage of trading using opposite Melia Hotels and Aena SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Aena SA 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 Aena SA will offset losses from the drop in Aena SA's long position.| Melia Hotels vs. International Consolidated Airlines | Melia Hotels vs. Merlin Properties SOCIMI | Melia Hotels vs. Aena SA | Melia Hotels vs. Acerinox |
| Aena SA vs. Hispanotels Inversiones SOCIMI | Aena SA vs. Azaria Rental SOCIMI | Aena SA vs. Inhome Prime Properties | Aena SA vs. Bankinter |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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