Correlation Between Mesa Air and Meliá Hotels
Can any of the company-specific risk be diversified away by investing in both Mesa Air and Meliá Hotels 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 Mesa Air and Meliá Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mesa Air Group and Meli Hotels International, you can compare the effects of market volatilities on Mesa Air and Meliá Hotels 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 Mesa Air with a short position of Meliá Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and Meliá Hotels.
Diversification Opportunities for Mesa Air and Meliá Hotels
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mesa and Meliá is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Meli Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meli Hotels International and Mesa Air 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 Mesa Air Group are associated (or correlated) with Meliá Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meli Hotels International has no effect on the direction of Mesa Air i.e., Mesa Air and Meliá Hotels go up and down completely randomly.
Pair Corralation between Mesa Air and Meliá Hotels
Given the investment horizon of 90 days Mesa Air Group is expected to generate 3.05 times more return on investment than Meliá Hotels. However, Mesa Air is 3.05 times more volatile than Meli Hotels International. It trades about 0.04 of its potential returns per unit of risk. Meli Hotels International is currently generating about 0.05 per unit of risk. If you would invest 78.00 in Mesa Air Group on August 27, 2024 and sell it today you would earn a total of 9.00 from holding Mesa Air Group or generate 11.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.97% |
| Values | Daily Returns |
Mesa Air Group vs. Meli Hotels International
Performance |
| Timeline |
| Mesa Air Group |
| Meli Hotels International |
Mesa Air and Meliá Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesa Air and Meliá Hotels
The main advantage of trading using opposite Mesa Air and Meliá Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, Meliá Hotels 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 Meliá Hotels will offset losses from the drop in Meliá Hotels' long position.| Mesa Air vs. Allegiant Travel | Mesa Air vs. Sun Country Airlines | Mesa Air vs. Frontier Group Holdings | Mesa Air vs. Azul SA |
| Meliá Hotels vs. Marriott International | Meliá Hotels vs. Hilton Worldwide Holdings | Meliá Hotels vs. InterContinental Hotels Group | Meliá Hotels vs. Accor SA |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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