Correlation Between MELIA HOTELS and Retail Estates
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and Retail Estates 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 Retail Estates into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and Retail Estates NV, you can compare the effects of market volatilities on MELIA HOTELS and Retail Estates 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 Retail Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and Retail Estates.
Diversification Opportunities for MELIA HOTELS and Retail Estates
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between MELIA and Retail is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and Retail Estates NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates NV 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 Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates NV has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and Retail Estates go up and down completely randomly.
Pair Corralation between MELIA HOTELS and Retail Estates
Assuming the 90 days trading horizon MELIA HOTELS is expected to generate 1.83 times more return on investment than Retail Estates. However, MELIA HOTELS is 1.83 times more volatile than Retail Estates NV. It trades about -0.01 of its potential returns per unit of risk. Retail Estates NV is currently generating about -0.09 per unit of risk. If you would invest 724.00 in MELIA HOTELS on November 9, 2024 and sell it today you would lose (7.00) from holding MELIA HOTELS or give up 0.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MELIA HOTELS vs. Retail Estates NV
Performance |
| Timeline |
| MELIA HOTELS |
| Retail Estates NV |
MELIA HOTELS and Retail Estates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and Retail Estates
The main advantage of trading using opposite MELIA HOTELS and Retail Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, Retail Estates 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 Retail Estates will offset losses from the drop in Retail Estates' long position.| MELIA HOTELS vs. ALBIS LEASING AG | MELIA HOTELS vs. FIRST SHIP LEASE | MELIA HOTELS vs. Sunny Optical Technology | MELIA HOTELS vs. Align Technology |
| Retail Estates vs. Cass Information Systems | Retail Estates vs. Teradata Corp | Retail Estates vs. CHINA EDUCATION GROUP | Retail Estates vs. Treasury Wine Estates |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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