Correlation Between NH Hoteles and Melia Hotels
Can any of the company-specific risk be diversified away by investing in both NH Hoteles and Melia 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 NH Hoteles and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NH Hoteles and Melia Hotels, you can compare the effects of market volatilities on NH Hoteles and Melia 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 NH Hoteles with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Hoteles and Melia Hotels.
Diversification Opportunities for NH Hoteles and Melia Hotels
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NHH and Melia is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding NH Hoteles and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and NH Hoteles 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 NH Hoteles are associated (or correlated) with Melia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melia Hotels has no effect on the direction of NH Hoteles i.e., NH Hoteles and Melia Hotels go up and down completely randomly.
Pair Corralation between NH Hoteles and Melia Hotels
Assuming the 90 days trading horizon NH Hoteles is expected to generate 0.84 times more return on investment than Melia Hotels. However, NH Hoteles is 1.19 times less risky than Melia Hotels. It trades about 0.02 of its potential returns per unit of risk. Melia Hotels is currently generating about -0.08 per unit of risk. If you would invest 428.00 in NH Hoteles on August 31, 2024 and sell it today you would earn a total of 11.00 from holding NH Hoteles or generate 2.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NH Hoteles vs. Melia Hotels
Performance |
| Timeline |
| NH Hoteles |
| Melia Hotels |
NH Hoteles and Melia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH Hoteles and Melia Hotels
The main advantage of trading using opposite NH Hoteles and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Hoteles position performs unexpectedly, Melia 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 Melia Hotels will offset losses from the drop in Melia Hotels' long position.| NH Hoteles vs. International Consolidated Airlines | NH Hoteles vs. Merlin Properties SOCIMI | NH Hoteles vs. Aena SA | NH Hoteles vs. Acerinox |
| Melia Hotels vs. International Consolidated Airlines | Melia Hotels vs. Merlin Properties SOCIMI | Melia Hotels vs. Aena SA | Melia Hotels vs. Acerinox |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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