Correlation Between MELIA HOTELS and ETFS Coffee
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and ETFS Coffee 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 ETFS Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and ETFS Coffee ETC, you can compare the effects of market volatilities on MELIA HOTELS and ETFS Coffee 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 ETFS Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and ETFS Coffee.
Diversification Opportunities for MELIA HOTELS and ETFS Coffee
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MELIA and ETFS is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and ETFS Coffee ETC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Coffee ETC 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 ETFS Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Coffee ETC has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and ETFS Coffee go up and down completely randomly.
Pair Corralation between MELIA HOTELS and ETFS Coffee
Assuming the 90 days trading horizon MELIA HOTELS is expected to generate 59.05 times less return on investment than ETFS Coffee. But when comparing it to its historical volatility, MELIA HOTELS is 25.89 times less risky than ETFS Coffee. It trades about 0.02 of its potential returns per unit of risk. ETFS Coffee ETC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 112.00 in ETFS Coffee ETC on September 1, 2024 and sell it today you would earn a total of 5,147 from holding ETFS Coffee ETC or generate 4595.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.42% |
| Values | Daily Returns |
MELIA HOTELS vs. ETFS Coffee ETC
Performance |
| Timeline |
| MELIA HOTELS |
| ETFS Coffee ETC |
MELIA HOTELS and ETFS Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and ETFS Coffee
The main advantage of trading using opposite MELIA HOTELS and ETFS Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, ETFS Coffee 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 ETFS Coffee will offset losses from the drop in ETFS Coffee's long position.| MELIA HOTELS vs. SIVERS SEMICONDUCTORS AB | MELIA HOTELS vs. Darden Restaurants | MELIA HOTELS vs. Reliance Steel Aluminum | MELIA HOTELS vs. Q2M Managementberatung AG |
| ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee 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 Stocks Directory module to find actively traded stocks across global markets.
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