Correlation Between Melia Hotels and Elaia Investment
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Elaia Investment 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 Elaia Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Elaia Investment Spain, you can compare the effects of market volatilities on Melia Hotels and Elaia Investment 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 Elaia Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Elaia Investment.
Diversification Opportunities for Melia Hotels and Elaia Investment
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Melia and Elaia is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Elaia Investment Spain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elaia Investment Spain 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 Elaia Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elaia Investment Spain has no effect on the direction of Melia Hotels i.e., Melia Hotels and Elaia Investment go up and down completely randomly.
Pair Corralation between Melia Hotels and Elaia Investment
Assuming the 90 days trading horizon Melia Hotels is expected to generate 0.25 times more return on investment than Elaia Investment. However, Melia Hotels is 4.06 times less risky than Elaia Investment. It trades about -0.03 of its potential returns per unit of risk. Elaia Investment Spain is currently generating about -0.21 per unit of risk. If you would invest 683.00 in Melia Hotels on September 1, 2024 and sell it today you would lose (6.00) from holding Melia Hotels or give up 0.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melia Hotels vs. Elaia Investment Spain
Performance |
| Timeline |
| Melia Hotels |
| Elaia Investment Spain |
Melia Hotels and Elaia Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melia Hotels and Elaia Investment
The main advantage of trading using opposite Melia Hotels and Elaia Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Elaia Investment 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 Elaia Investment will offset losses from the drop in Elaia Investment's long position.| Melia Hotels vs. International Consolidated Airlines | Melia Hotels vs. Merlin Properties SOCIMI | Melia Hotels vs. Aena SA | Melia Hotels vs. Acerinox |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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