Correlation Between Melia Hotels and Nueva Expresin
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Nueva Expresin 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 Nueva Expresin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Nueva Expresin Textil, you can compare the effects of market volatilities on Melia Hotels and Nueva Expresin 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 Nueva Expresin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Nueva Expresin.
Diversification Opportunities for Melia Hotels and Nueva Expresin
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Melia and Nueva is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Nueva Expresin Textil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nueva Expresin Textil 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 Nueva Expresin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nueva Expresin Textil has no effect on the direction of Melia Hotels i.e., Melia Hotels and Nueva Expresin go up and down completely randomly.
Pair Corralation between Melia Hotels and Nueva Expresin
Assuming the 90 days trading horizon Melia Hotels is expected to generate 0.66 times more return on investment than Nueva Expresin. However, Melia Hotels is 1.51 times less risky than Nueva Expresin. It trades about 0.11 of its potential returns per unit of risk. Nueva Expresin Textil is currently generating about -0.17 per unit of risk. If you would invest 674.00 in Melia Hotels on August 27, 2024 and sell it today you would earn a total of 18.00 from holding Melia Hotels or generate 2.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melia Hotels vs. Nueva Expresin Textil
Performance |
| Timeline |
| Melia Hotels |
| Nueva Expresin Textil |
Melia Hotels and Nueva Expresin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Nueva Expresin
The main advantage of trading using opposite Melia Hotels and Nueva Expresin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Nueva Expresin 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 Nueva Expresin will offset losses from the drop in Nueva Expresin's long position.| Melia Hotels vs. International Consolidated Airlines | Melia Hotels vs. Merlin Properties SOCIMI | Melia Hotels vs. Aena SA | Melia Hotels vs. Acerinox |
| Nueva Expresin vs. Azaria Rental SOCIMI | Nueva Expresin vs. Melia Hotels | Nueva Expresin vs. Home Capital Rentals | Nueva Expresin vs. International Consolidated Airlines |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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