Correlation Between MELIA HOTELS and Dominion Energy
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and Dominion Energy 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 Dominion Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and Dominion Energy, you can compare the effects of market volatilities on MELIA HOTELS and Dominion Energy 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 Dominion Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and Dominion Energy.
Diversification Opportunities for MELIA HOTELS and Dominion Energy
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MELIA and Dominion is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and Dominion Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominion Energy 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 Dominion Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominion Energy has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and Dominion Energy go up and down completely randomly.
Pair Corralation between MELIA HOTELS and Dominion Energy
Assuming the 90 days trading horizon MELIA HOTELS is expected to under-perform the Dominion Energy. In addition to that, MELIA HOTELS is 1.48 times more volatile than Dominion Energy. It trades about 0.0 of its total potential returns per unit of risk. Dominion Energy is currently generating about 0.16 per unit of volatility. If you would invest 5,332 in Dominion Energy on September 4, 2024 and sell it today you would earn a total of 232.00 from holding Dominion Energy or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MELIA HOTELS vs. Dominion Energy
Performance |
| Timeline |
| MELIA HOTELS |
| Dominion Energy |
MELIA HOTELS and Dominion Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and Dominion Energy
The main advantage of trading using opposite MELIA HOTELS and Dominion Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, Dominion Energy 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 Dominion Energy will offset losses from the drop in Dominion Energy's long position.| MELIA HOTELS vs. LANDSEA HOMES P | MELIA HOTELS vs. VITEC SOFTWARE GROUP | MELIA HOTELS vs. Sqs Software Quality | MELIA HOTELS vs. Neinor Homes SA |
| Dominion Energy vs. Mobilezone Holding AG | Dominion Energy vs. United Rentals | Dominion Energy vs. Tower One Wireless | Dominion Energy vs. GEAR4MUSIC LS 10 |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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