Correlation Between MELIA HOTELS and SWISS WATER
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and SWISS WATER 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 SWISS WATER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and SWISS WATER DECAFFCOFFEE, you can compare the effects of market volatilities on MELIA HOTELS and SWISS WATER 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 SWISS WATER. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and SWISS WATER.
Diversification Opportunities for MELIA HOTELS and SWISS WATER
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MELIA and SWISS is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and SWISS WATER DECAFFCOFFEE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWISS WATER DECAFFCOFFEE 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 SWISS WATER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWISS WATER DECAFFCOFFEE has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and SWISS WATER go up and down completely randomly.
Pair Corralation between MELIA HOTELS and SWISS WATER
Assuming the 90 days trading horizon MELIA HOTELS is expected to generate 0.53 times more return on investment than SWISS WATER. However, MELIA HOTELS is 1.87 times less risky than SWISS WATER. It trades about 0.07 of its potential returns per unit of risk. SWISS WATER DECAFFCOFFEE is currently generating about -0.01 per unit of risk. If you would invest 671.00 in MELIA HOTELS on October 14, 2024 and sell it today you would earn a total of 43.00 from holding MELIA HOTELS or generate 6.41% 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. SWISS WATER DECAFFCOFFEE
Performance |
| Timeline |
| MELIA HOTELS |
| SWISS WATER DECAFFCOFFEE |
MELIA HOTELS and SWISS WATER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and SWISS WATER
The main advantage of trading using opposite MELIA HOTELS and SWISS WATER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, SWISS WATER 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 SWISS WATER will offset losses from the drop in SWISS WATER's long position.| MELIA HOTELS vs. Easy Software AG | MELIA HOTELS vs. ELMOS SEMICONDUCTOR | MELIA HOTELS vs. OPERA SOFTWARE | MELIA HOTELS vs. CyberArk Software |
| SWISS WATER vs. Choice Hotels International | SWISS WATER vs. MELIA HOTELS | SWISS WATER vs. NH HOTEL GROUP | SWISS WATER vs. InterContinental Hotels Group |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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