Correlation Between MELIA HOTELS and Kubota
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and Kubota 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 Kubota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and Kubota, you can compare the effects of market volatilities on MELIA HOTELS and Kubota 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 Kubota. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and Kubota.
Diversification Opportunities for MELIA HOTELS and Kubota
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MELIA and Kubota is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and Kubota in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kubota 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 Kubota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kubota has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and Kubota go up and down completely randomly.
Pair Corralation between MELIA HOTELS and Kubota
Assuming the 90 days trading horizon MELIA HOTELS is expected to generate 1.19 times more return on investment than Kubota. However, MELIA HOTELS is 1.19 times more volatile than Kubota. It trades about 0.07 of its potential returns per unit of risk. Kubota is currently generating about -0.17 per unit of risk. If you would invest 671.00 in MELIA HOTELS on September 13, 2024 and sell it today you would earn a total of 32.00 from holding MELIA HOTELS or generate 4.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MELIA HOTELS vs. Kubota
Performance |
| Timeline |
| MELIA HOTELS |
| Kubota |
MELIA HOTELS and Kubota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and Kubota
The main advantage of trading using opposite MELIA HOTELS and Kubota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, Kubota 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 Kubota will offset losses from the drop in Kubota's long position.| MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc |
| Kubota vs. SPORTING | Kubota vs. MELIA HOTELS | Kubota vs. Pebblebrook Hotel Trust | Kubota vs. Choice Hotels International |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |