Correlation Between Old Republic and Meliá Hotels
Can any of the company-specific risk be diversified away by investing in both Old Republic 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 Old Republic and Meliá Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Republic International and Meli Hotels International, you can compare the effects of market volatilities on Old Republic 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 Old Republic with a short position of Meliá Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and Meliá Hotels.
Diversification Opportunities for Old Republic and Meliá Hotels
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Old and Meliá is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International 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 Old Republic 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 Old Republic International 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 Old Republic i.e., Old Republic and Meliá Hotels go up and down completely randomly.
Pair Corralation between Old Republic and Meliá Hotels
Considering the 90-day investment horizon Old Republic International is expected to generate 0.52 times more return on investment than Meliá Hotels. However, Old Republic International is 1.91 times less risky than Meliá Hotels. It trades about 0.1 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 2,291 in Old Republic International on September 4, 2024 and sell it today you would earn a total of 1,566 from holding Old Republic International or generate 68.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.68% |
| Values | Daily Returns |
Old Republic International vs. Meli Hotels International
Performance |
| Timeline |
| Old Republic Interna |
| Meli Hotels International |
Old Republic and Meliá Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Republic and Meliá Hotels
The main advantage of trading using opposite Old Republic and Meliá Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic 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.| Old Republic vs. Progressive Corp | Old Republic vs. Cincinnati Financial | Old Republic vs. W R Berkley | Old Republic vs. The Allstate |
| Meliá Hotels vs. Skillful Craftsman Education | Meliá Hotels vs. BJs Restaurants | Meliá Hotels vs. Cracker Barrel Old | Meliá Hotels vs. Sphere Entertainment Co |
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 CEOs Directory module to screen CEOs from public companies around the world.
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