Correlation Between MELIA HOTELS and ESSILORLUXOTTICA
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and ESSILORLUXOTTICA 12ON, you can compare the effects of market volatilities on MELIA HOTELS and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and ESSILORLUXOTTICA.
Diversification Opportunities for MELIA HOTELS and ESSILORLUXOTTICA
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MELIA and ESSILORLUXOTTICA is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and ESSILORLUXOTTICA 12ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSILORLUXOTTICA 12ON 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 ESSILORLUXOTTICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSILORLUXOTTICA 12ON has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and ESSILORLUXOTTICA go up and down completely randomly.
Pair Corralation between MELIA HOTELS and ESSILORLUXOTTICA
Assuming the 90 days trading horizon MELIA HOTELS is expected to generate 1.57 times more return on investment than ESSILORLUXOTTICA. However, MELIA HOTELS is 1.57 times more volatile than ESSILORLUXOTTICA 12ON. It trades about 0.04 of its potential returns per unit of risk. ESSILORLUXOTTICA 12ON is currently generating about 0.05 per unit of risk. If you would invest 506.00 in MELIA HOTELS on August 26, 2024 and sell it today you would earn a total of 185.00 from holding MELIA HOTELS or generate 36.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MELIA HOTELS vs. ESSILORLUXOTTICA 12ON
Performance |
| Timeline |
| MELIA HOTELS |
| ESSILORLUXOTTICA 12ON |
MELIA HOTELS and ESSILORLUXOTTICA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and ESSILORLUXOTTICA
The main advantage of trading using opposite MELIA HOTELS and ESSILORLUXOTTICA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, ESSILORLUXOTTICA 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 ESSILORLUXOTTICA will offset losses from the drop in ESSILORLUXOTTICA's long position.| MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc |
| ESSILORLUXOTTICA vs. Xenia Hotels Resorts | ESSILORLUXOTTICA vs. MELIA HOTELS | ESSILORLUXOTTICA vs. Meli Hotels International | ESSILORLUXOTTICA vs. BORR DRILLING NEW |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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