Correlation Between MELIA HOTELS and Strategic Education
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and Strategic Education 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 Strategic Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and Strategic Education, you can compare the effects of market volatilities on MELIA HOTELS and Strategic Education 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 Strategic Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and Strategic Education.
Diversification Opportunities for MELIA HOTELS and Strategic Education
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MELIA and Strategic is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and Strategic Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Education 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 Strategic Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Education has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and Strategic Education go up and down completely randomly.
Pair Corralation between MELIA HOTELS and Strategic Education
Assuming the 90 days trading horizon MELIA HOTELS is expected to generate 11.84 times less return on investment than Strategic Education. In addition to that, MELIA HOTELS is 1.89 times more volatile than Strategic Education. It trades about 0.02 of its total potential returns per unit of risk. Strategic Education is currently generating about 0.35 per unit of volatility. If you would invest 8,750 in Strategic Education on November 8, 2024 and sell it today you would earn a total of 700.00 from holding Strategic Education or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MELIA HOTELS vs. Strategic Education
Performance |
| Timeline |
| MELIA HOTELS |
| Strategic Education |
MELIA HOTELS and Strategic Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MELIA HOTELS and Strategic Education
The main advantage of trading using opposite MELIA HOTELS and Strategic Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, Strategic Education 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 Strategic Education will offset losses from the drop in Strategic Education's long position.| MELIA HOTELS vs. Magnachip Semiconductor | MELIA HOTELS vs. Hua Hong Semiconductor | MELIA HOTELS vs. MeVis Medical Solutions | MELIA HOTELS vs. ELMOS SEMICONDUCTOR |
| Strategic Education vs. ARDAGH METAL PACDL 0001 | Strategic Education vs. East Africa Metals | Strategic Education vs. Scottish Mortgage Investment | Strategic Education vs. Harmony Gold Mining |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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