Correlation Between MELIA HOTELS and ITV Plc
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and ITV Plc 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 ITV Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and ITV plc, you can compare the effects of market volatilities on MELIA HOTELS and ITV Plc 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 ITV Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and ITV Plc.
Diversification Opportunities for MELIA HOTELS and ITV Plc
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MELIA and ITV is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and ITV plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITV plc 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 ITV Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITV plc has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and ITV Plc go up and down completely randomly.
Pair Corralation between MELIA HOTELS and ITV Plc
Assuming the 90 days trading horizon MELIA HOTELS is expected to generate 4.9 times less return on investment than ITV Plc. But when comparing it to its historical volatility, MELIA HOTELS is 1.09 times less risky than ITV Plc. It trades about 0.08 of its potential returns per unit of risk. ITV plc is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 74.00 in ITV plc on September 15, 2024 and sell it today you would earn a total of 15.00 from holding ITV plc or generate 20.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
MELIA HOTELS vs. ITV plc
Performance |
| Timeline |
| MELIA HOTELS |
| ITV plc |
MELIA HOTELS and ITV Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and ITV Plc
The main advantage of trading using opposite MELIA HOTELS and ITV Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, ITV Plc 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 ITV Plc will offset losses from the drop in ITV Plc's long position.| MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc |
| ITV Plc vs. MIRAMAR HOTEL INV | ITV Plc vs. MELIA HOTELS | ITV Plc vs. Wyndham Hotels Resorts | ITV Plc vs. PPHE HOTEL 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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