Correlation Between Melia Hotels and Grupo Ecoener
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Grupo Ecoener 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 Grupo Ecoener into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Grupo Ecoener SA, you can compare the effects of market volatilities on Melia Hotels and Grupo Ecoener 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 Grupo Ecoener. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Grupo Ecoener.
Diversification Opportunities for Melia Hotels and Grupo Ecoener
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Melia and Grupo is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Grupo Ecoener SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Ecoener 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 Grupo Ecoener. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Ecoener SA has no effect on the direction of Melia Hotels i.e., Melia Hotels and Grupo Ecoener go up and down completely randomly.
Pair Corralation between Melia Hotels and Grupo Ecoener
Assuming the 90 days trading horizon Melia Hotels is expected to under-perform the Grupo Ecoener. But the stock apears to be less risky and, when comparing its historical volatility, Melia Hotels is 1.29 times less risky than Grupo Ecoener. The stock trades about -0.04 of its potential returns per unit of risk. The Grupo Ecoener SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 426.00 in Grupo Ecoener SA on September 5, 2024 and sell it today you would earn a total of 8.00 from holding Grupo Ecoener SA or generate 1.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Melia Hotels vs. Grupo Ecoener SA
Performance |
| Timeline |
| Melia Hotels |
| Grupo Ecoener SA |
Melia Hotels and Grupo Ecoener Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Grupo Ecoener
The main advantage of trading using opposite Melia Hotels and Grupo Ecoener positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Grupo Ecoener 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 Grupo Ecoener will offset losses from the drop in Grupo Ecoener's long position.| Melia Hotels vs. Aedas Homes SL | Melia Hotels vs. Metrovacesa SA | Melia Hotels vs. Merlin Properties SOCIMI | Melia Hotels vs. Lar Espana Real |
| Grupo Ecoener vs. Energy Solar Tech | Grupo Ecoener vs. Melia Hotels | Grupo Ecoener vs. Ebro Foods | Grupo Ecoener vs. Tier1 Technology SA |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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