Correlation Between MELIA HOTELS and Adtalem Global
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and Adtalem Global 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 Adtalem Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and Adtalem Global Education, you can compare the effects of market volatilities on MELIA HOTELS and Adtalem Global 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 Adtalem Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and Adtalem Global.
Diversification Opportunities for MELIA HOTELS and Adtalem Global
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MELIA and Adtalem is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and Adtalem Global Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adtalem Global Education 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 Adtalem Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adtalem Global Education has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and Adtalem Global go up and down completely randomly.
Pair Corralation between MELIA HOTELS and Adtalem Global
Assuming the 90 days trading horizon MELIA HOTELS is expected to generate 3.97 times less return on investment than Adtalem Global. But when comparing it to its historical volatility, MELIA HOTELS is 1.18 times less risky than Adtalem Global. It trades about 0.03 of its potential returns per unit of risk. Adtalem Global Education is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,540 in Adtalem Global Education on October 16, 2024 and sell it today you would earn a total of 5,610 from holding Adtalem Global Education or generate 158.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MELIA HOTELS vs. Adtalem Global Education
Performance |
| Timeline |
| MELIA HOTELS |
| Adtalem Global Education |
MELIA HOTELS and Adtalem Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and Adtalem Global
The main advantage of trading using opposite MELIA HOTELS and Adtalem Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, Adtalem Global 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 Adtalem Global will offset losses from the drop in Adtalem Global's long position.| MELIA HOTELS vs. INDO RAMA SYNTHETIC | MELIA HOTELS vs. China BlueChemical | MELIA HOTELS vs. Sinopec Shanghai Petrochemical | MELIA HOTELS vs. Silicon Motion Technology |
| Adtalem Global vs. Ebro Foods SA | Adtalem Global vs. PLANT VEDA FOODS | Adtalem Global vs. ZINC MEDIA GR | Adtalem Global vs. Dave Busters Entertainment |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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