Correlation Between MELIA HOTELS and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and Lloyds Banking 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 Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and Lloyds Banking Group, you can compare the effects of market volatilities on MELIA HOTELS and Lloyds Banking 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 Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and Lloyds Banking.
Diversification Opportunities for MELIA HOTELS and Lloyds Banking
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MELIA and Lloyds is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and Lloyds Banking Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lloyds Banking Group 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 Lloyds Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lloyds Banking Group has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and Lloyds Banking go up and down completely randomly.
Pair Corralation between MELIA HOTELS and Lloyds Banking
Assuming the 90 days trading horizon MELIA HOTELS is expected to generate 0.39 times more return on investment than Lloyds Banking. However, MELIA HOTELS is 2.58 times less risky than Lloyds Banking. It trades about 0.07 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about -0.03 per unit of risk. If you would invest 668.00 in MELIA HOTELS on August 28, 2024 and sell it today you would earn a total of 24.00 from holding MELIA HOTELS or generate 3.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MELIA HOTELS vs. Lloyds Banking Group
Performance |
| Timeline |
| MELIA HOTELS |
| Lloyds Banking Group |
MELIA HOTELS and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and Lloyds Banking
The main advantage of trading using opposite MELIA HOTELS and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, Lloyds Banking 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 Lloyds Banking will offset losses from the drop in Lloyds Banking's long position.| MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Microsoft | MELIA HOTELS vs. Microsoft |
| Lloyds Banking vs. SYSTEMAIR AB | Lloyds Banking vs. COLUMBIA SPORTSWEAR | Lloyds Banking vs. EIDESVIK OFFSHORE NK | Lloyds Banking vs. ANTA SPORTS PRODUCT |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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