Correlation Between MSCI WORLD and MELIA HOTELS
Can any of the company-specific risk be diversified away by investing in both MSCI WORLD 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 MSCI WORLD and MELIA HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MSCI WORLD CLIMATE and MELIA HOTELS, you can compare the effects of market volatilities on MSCI WORLD 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 MSCI WORLD with a short position of MELIA HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSCI WORLD and MELIA HOTELS.
Diversification Opportunities for MSCI WORLD and MELIA HOTELS
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MSCI and MELIA is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding MSCI WORLD CLIMATE and MELIA HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MELIA HOTELS and MSCI WORLD 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 MSCI WORLD CLIMATE 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 MSCI WORLD i.e., MSCI WORLD and MELIA HOTELS go up and down completely randomly.
Pair Corralation between MSCI WORLD and MELIA HOTELS
Assuming the 90 days trading horizon MSCI WORLD CLIMATE is expected to generate 1.38 times more return on investment than MELIA HOTELS. However, MSCI WORLD is 1.38 times more volatile than MELIA HOTELS. It trades about 0.11 of its potential returns per unit of risk. MELIA HOTELS is currently generating about 0.04 per unit of risk. If you would invest 1,910 in MSCI WORLD CLIMATE on September 4, 2024 and sell it today you would earn a total of 6,040 from holding MSCI WORLD CLIMATE or generate 316.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
MSCI WORLD CLIMATE vs. MELIA HOTELS
Performance |
| Timeline |
| MSCI WORLD CLIMATE |
| MELIA HOTELS |
MSCI WORLD and MELIA HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MSCI WORLD and MELIA HOTELS
The main advantage of trading using opposite MSCI WORLD and MELIA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSCI WORLD 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's long position.| MSCI WORLD vs. MagnaChip Semiconductor Corp | MSCI WORLD vs. FANDIFI TECHNOLOGY P | MSCI WORLD vs. Microchip Technology Incorporated | MSCI WORLD vs. Magnachip Semiconductor |
| MELIA HOTELS vs. LANDSEA HOMES P | MELIA HOTELS vs. VITEC SOFTWARE GROUP | MELIA HOTELS vs. Sqs Software Quality | MELIA HOTELS vs. Neinor Homes 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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