Correlation Between Melia Hotels and Renta Corporacion
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Renta Corporacion 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 Renta Corporacion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Renta Corporacion Real, you can compare the effects of market volatilities on Melia Hotels and Renta Corporacion 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 Renta Corporacion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Renta Corporacion.
Diversification Opportunities for Melia Hotels and Renta Corporacion
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Melia and Renta is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Renta Corporacion Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renta Corporacion Real 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 Renta Corporacion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renta Corporacion Real has no effect on the direction of Melia Hotels i.e., Melia Hotels and Renta Corporacion go up and down completely randomly.
Pair Corralation between Melia Hotels and Renta Corporacion
Assuming the 90 days trading horizon Melia Hotels is expected to generate 0.81 times more return on investment than Renta Corporacion. However, Melia Hotels is 1.23 times less risky than Renta Corporacion. It trades about 0.06 of its potential returns per unit of risk. Renta Corporacion Real is currently generating about -0.05 per unit of risk. If you would invest 459.00 in Melia Hotels on September 13, 2024 and sell it today you would earn a total of 281.00 from holding Melia Hotels or generate 61.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Melia Hotels vs. Renta Corporacion Real
Performance |
| Timeline |
| Melia Hotels |
| Renta Corporacion Real |
Melia Hotels and Renta Corporacion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Renta Corporacion
The main advantage of trading using opposite Melia Hotels and Renta Corporacion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Renta Corporacion 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 Renta Corporacion will offset losses from the drop in Renta Corporacion's long position.| Melia Hotels vs. International Consolidated Airlines | Melia Hotels vs. Aena SA | Melia Hotels vs. Acerinox | Melia Hotels vs. ACS Actividades de |
| Renta Corporacion vs. Caixabank SA | Renta Corporacion vs. Tier1 Technology SA | Renta Corporacion vs. Melia Hotels | Renta Corporacion vs. All Iron Re |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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