Correlation Between MELIA HOTELS and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and Beazer Homes 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 Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and Beazer Homes USA, you can compare the effects of market volatilities on MELIA HOTELS and Beazer Homes 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 Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and Beazer Homes.
Diversification Opportunities for MELIA HOTELS and Beazer Homes
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MELIA and Beazer is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and Beazer Homes USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beazer Homes USA 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 Beazer Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beazer Homes USA has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and Beazer Homes go up and down completely randomly.
Pair Corralation between MELIA HOTELS and Beazer Homes
Assuming the 90 days trading horizon MELIA HOTELS is expected to under-perform the Beazer Homes. But the stock apears to be less risky and, when comparing its historical volatility, MELIA HOTELS is 1.23 times less risky than Beazer Homes. The stock trades about -0.14 of its potential returns per unit of risk. The Beazer Homes USA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 2,660 in Beazer Homes USA on October 28, 2024 and sell it today you would lose (40.00) from holding Beazer Homes USA or give up 1.5% 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. Beazer Homes USA
Performance |
| Timeline |
| MELIA HOTELS |
| Beazer Homes USA |
MELIA HOTELS and Beazer Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and Beazer Homes
The main advantage of trading using opposite MELIA HOTELS and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, Beazer Homes 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 Beazer Homes will offset losses from the drop in Beazer Homes' long position.| MELIA HOTELS vs. COMBA TELECOM SYST | MELIA HOTELS vs. FUYO GENERAL LEASE | MELIA HOTELS vs. LOANDEPOT INC A | MELIA HOTELS vs. HUTCHISON TELECOMM |
| Beazer Homes vs. NVR Inc | Beazer Homes vs. Sekisui Chemical Co | Beazer Homes vs. Superior Plus Corp | Beazer Homes vs. Origin Agritech |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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