Correlation Between Metrovacesa and Millenium Hotels
Can any of the company-specific risk be diversified away by investing in both Metrovacesa and Millenium 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 Metrovacesa and Millenium Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metrovacesa SA and Millenium Hotels Real, you can compare the effects of market volatilities on Metrovacesa and Millenium 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 Metrovacesa with a short position of Millenium Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metrovacesa and Millenium Hotels.
Diversification Opportunities for Metrovacesa and Millenium Hotels
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Metrovacesa and Millenium is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Metrovacesa SA and Millenium Hotels Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millenium Hotels Real and Metrovacesa 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 Metrovacesa SA are associated (or correlated) with Millenium Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millenium Hotels Real has no effect on the direction of Metrovacesa i.e., Metrovacesa and Millenium Hotels go up and down completely randomly.
Pair Corralation between Metrovacesa and Millenium Hotels
Assuming the 90 days trading horizon Metrovacesa is expected to generate 3.34 times less return on investment than Millenium Hotels. But when comparing it to its historical volatility, Metrovacesa SA is 2.6 times less risky than Millenium Hotels. It trades about 0.12 of its potential returns per unit of risk. Millenium Hotels Real is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 260.00 in Millenium Hotels Real on August 31, 2024 and sell it today you would earn a total of 20.00 from holding Millenium Hotels Real or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metrovacesa SA vs. Millenium Hotels Real
Performance |
| Timeline |
| Metrovacesa SA |
| Millenium Hotels Real |
Metrovacesa and Millenium Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metrovacesa and Millenium Hotels
The main advantage of trading using opposite Metrovacesa and Millenium Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metrovacesa position performs unexpectedly, Millenium 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 Millenium Hotels will offset losses from the drop in Millenium Hotels' long position.| Metrovacesa vs. NH Hoteles | Metrovacesa vs. Fomento de Construcciones | Metrovacesa vs. Inmobiliaria Colonial SA | Metrovacesa vs. Aedas Homes SL |
| Millenium Hotels vs. Industria de Diseno | Millenium Hotels vs. Iberdrola SA | Millenium Hotels vs. Banco Santander | Millenium Hotels vs. Caixabank 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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