Correlation Between Merit Medical and Meliá Hotels
Can any of the company-specific risk be diversified away by investing in both Merit Medical 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 Merit Medical and Meliá Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merit Medical Systems and Meli Hotels International, you can compare the effects of market volatilities on Merit Medical 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 Merit Medical with a short position of Meliá Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Meliá Hotels.
Diversification Opportunities for Merit Medical and Meliá Hotels
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Merit and Meliá is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems 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 Merit Medical 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 Merit Medical Systems 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 Merit Medical i.e., Merit Medical and Meliá Hotels go up and down completely randomly.
Pair Corralation between Merit Medical and Meliá Hotels
Given the investment horizon of 90 days Merit Medical Systems is expected to generate 0.56 times more return on investment than Meliá Hotels. However, Merit Medical Systems is 1.78 times less risky than Meliá Hotels. It trades about 0.16 of its potential returns per unit of risk. Meli Hotels International is currently generating about -0.06 per unit of risk. If you would invest 8,238 in Merit Medical Systems on September 5, 2024 and sell it today you would earn a total of 2,244 from holding Merit Medical Systems or generate 27.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.2% |
| Values | Daily Returns |
Merit Medical Systems vs. Meli Hotels International
Performance |
| Timeline |
| Merit Medical Systems |
| Meli Hotels International |
Merit Medical and Meliá Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Meliá Hotels
The main advantage of trading using opposite Merit Medical and Meliá Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical 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.| Merit Medical vs. Teleflex Incorporated | Merit Medical vs. The Cooper Companies, | Merit Medical vs. West Pharmaceutical Services | Merit Medical vs. ICU Medical |
| Meliá Hotels vs. Merit Medical Systems | Meliá Hotels vs. SunLink Health Systems | Meliá Hotels vs. NETGEAR | Meliá Hotels vs. ServiceNow |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |