Correlation Between MELIA HOTELS and Merit Medical
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and Merit Medical 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 Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and Merit Medical Systems, you can compare the effects of market volatilities on MELIA HOTELS and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and Merit Medical.
Diversification Opportunities for MELIA HOTELS and Merit Medical
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MELIA and Merit is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and Merit Medical go up and down completely randomly.
Pair Corralation between MELIA HOTELS and Merit Medical
Assuming the 90 days trading horizon MELIA HOTELS is expected to generate 3.73 times less return on investment than Merit Medical. But when comparing it to its historical volatility, MELIA HOTELS is 1.07 times less risky than Merit Medical. It trades about 0.06 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 8,950 in Merit Medical Systems on September 3, 2024 and sell it today you would earn a total of 800.00 from holding Merit Medical Systems or generate 8.94% 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. Merit Medical Systems
Performance |
| Timeline |
| MELIA HOTELS |
| Merit Medical Systems |
MELIA HOTELS and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and Merit Medical
The main advantage of trading using opposite MELIA HOTELS and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.| MELIA HOTELS vs. TOTAL GABON | MELIA HOTELS vs. Walgreens Boots Alliance | MELIA HOTELS vs. Peak Resources Limited |
| Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc |
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.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |