Correlation Between MELIA HOTELS and NORWEGIAN AIR
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and NORWEGIAN AIR 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 NORWEGIAN AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and NORWEGIAN AIR SHUT, you can compare the effects of market volatilities on MELIA HOTELS and NORWEGIAN AIR 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 NORWEGIAN AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and NORWEGIAN AIR.
Diversification Opportunities for MELIA HOTELS and NORWEGIAN AIR
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between MELIA and NORWEGIAN is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and NORWEGIAN AIR SHUT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORWEGIAN AIR SHUT 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 NORWEGIAN AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORWEGIAN AIR SHUT has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and NORWEGIAN AIR go up and down completely randomly.
Pair Corralation between MELIA HOTELS and NORWEGIAN AIR
Assuming the 90 days trading horizon MELIA HOTELS is expected to generate 0.59 times more return on investment than NORWEGIAN AIR. However, MELIA HOTELS is 1.69 times less risky than NORWEGIAN AIR. It trades about 0.02 of its potential returns per unit of risk. NORWEGIAN AIR SHUT is currently generating about -0.02 per unit of risk. If you would invest 674.00 in MELIA HOTELS on October 24, 2024 and sell it today you would earn a total of 10.00 from holding MELIA HOTELS or generate 1.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MELIA HOTELS vs. NORWEGIAN AIR SHUT
Performance |
| Timeline |
| MELIA HOTELS |
| NORWEGIAN AIR SHUT |
MELIA HOTELS and NORWEGIAN AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and NORWEGIAN AIR
The main advantage of trading using opposite MELIA HOTELS and NORWEGIAN AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, NORWEGIAN AIR 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 NORWEGIAN AIR will offset losses from the drop in NORWEGIAN AIR's long position.| MELIA HOTELS vs. Park Hotels Resorts | MELIA HOTELS vs. Hyatt Hotels | MELIA HOTELS vs. Air Transport Services | MELIA HOTELS vs. SOEDER SPORTFISKE AB |
| NORWEGIAN AIR vs. CAIRN HOMES EO | NORWEGIAN AIR vs. CITY OFFICE REIT | NORWEGIAN AIR vs. MELIA HOTELS | NORWEGIAN AIR vs. ADDUS HOMECARE |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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