Correlation Between Melia Hotels and Revenga Ingenieros
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Revenga Ingenieros 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 Revenga Ingenieros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Revenga Ingenieros SA, you can compare the effects of market volatilities on Melia Hotels and Revenga Ingenieros 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 Revenga Ingenieros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Revenga Ingenieros.
Diversification Opportunities for Melia Hotels and Revenga Ingenieros
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Melia and Revenga is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Revenga Ingenieros SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revenga Ingenieros 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 Revenga Ingenieros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revenga Ingenieros has no effect on the direction of Melia Hotels i.e., Melia Hotels and Revenga Ingenieros go up and down completely randomly.
Pair Corralation between Melia Hotels and Revenga Ingenieros
Assuming the 90 days trading horizon Melia Hotels is expected to generate 1.12 times more return on investment than Revenga Ingenieros. However, Melia Hotels is 1.12 times more volatile than Revenga Ingenieros SA. It trades about 0.05 of its potential returns per unit of risk. Revenga Ingenieros SA is currently generating about -0.05 per unit of risk. If you would invest 485.00 in Melia Hotels on September 2, 2024 and sell it today you would earn a total of 192.00 from holding Melia Hotels or generate 39.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 50.59% |
| Values | Daily Returns |
Melia Hotels vs. Revenga Ingenieros SA
Performance |
| Timeline |
| Melia Hotels |
| Revenga Ingenieros |
Melia Hotels and Revenga Ingenieros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Revenga Ingenieros
The main advantage of trading using opposite Melia Hotels and Revenga Ingenieros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Revenga Ingenieros 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 Revenga Ingenieros will offset losses from the drop in Revenga Ingenieros' long position.| Melia Hotels vs. International Consolidated Airlines | Melia Hotels vs. Merlin Properties SOCIMI | Melia Hotels vs. Aena SA | Melia Hotels vs. Acerinox |
| Revenga Ingenieros vs. Vytrus Biotech SA | Revenga Ingenieros vs. Techo Hogar SOCIMI, | Revenga Ingenieros vs. Technomeca Aerospace SA | Revenga Ingenieros 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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