Correlation Between MELIA HOTELS and SIRIUS XM
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and SIRIUS XM 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 SIRIUS XM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and SIRIUS XM RADIO, you can compare the effects of market volatilities on MELIA HOTELS and SIRIUS XM 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 SIRIUS XM. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and SIRIUS XM.
Diversification Opportunities for MELIA HOTELS and SIRIUS XM
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MELIA and SIRIUS is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and SIRIUS XM RADIO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIRIUS XM RADIO 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 SIRIUS XM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIRIUS XM RADIO has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and SIRIUS XM go up and down completely randomly.
Pair Corralation between MELIA HOTELS and SIRIUS XM
Assuming the 90 days trading horizon MELIA HOTELS is expected to generate 0.48 times more return on investment than SIRIUS XM. However, MELIA HOTELS is 2.08 times less risky than SIRIUS XM. It trades about 0.14 of its potential returns per unit of risk. SIRIUS XM RADIO is currently generating about 0.02 per unit of risk. If you would invest 665.00 in MELIA HOTELS on August 29, 2024 and sell it today you would earn a total of 27.00 from holding MELIA HOTELS or generate 4.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
MELIA HOTELS vs. SIRIUS XM RADIO
Performance |
| Timeline |
| MELIA HOTELS |
| SIRIUS XM RADIO |
MELIA HOTELS and SIRIUS XM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and SIRIUS XM
The main advantage of trading using opposite MELIA HOTELS and SIRIUS XM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, SIRIUS XM 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 SIRIUS XM will offset losses from the drop in SIRIUS XM's long position.| MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Superior Plus Corp | MELIA HOTELS vs. SIVERS SEMICONDUCTORS AB |
| SIRIUS XM vs. Apple Inc | SIRIUS XM vs. Apple Inc | SIRIUS XM vs. Superior Plus Corp | SIRIUS XM vs. SIVERS SEMICONDUCTORS AB |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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