Correlation Between Wayside Technology and Meliá Hotels
Can any of the company-specific risk be diversified away by investing in both Wayside Technology 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 Wayside Technology and Meliá Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wayside Technology Group and Meli Hotels International, you can compare the effects of market volatilities on Wayside Technology 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 Wayside Technology with a short position of Meliá Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wayside Technology and Meliá Hotels.
Diversification Opportunities for Wayside Technology and Meliá Hotels
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wayside and Meliá is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Wayside Technology Group 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 Wayside Technology 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 Wayside Technology Group 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 Wayside Technology i.e., Wayside Technology and Meliá Hotels go up and down completely randomly.
Pair Corralation between Wayside Technology and Meliá Hotels
Assuming the 90 days horizon Wayside Technology Group is expected to generate 1.76 times more return on investment than Meliá Hotels. However, Wayside Technology is 1.76 times more volatile than Meli Hotels International. It trades about 0.1 of its potential returns per unit of risk. Meli Hotels International is currently generating about 0.03 per unit of risk. If you would invest 3,317 in Wayside Technology Group on November 5, 2024 and sell it today you would earn a total of 9,183 from holding Wayside Technology Group or generate 276.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wayside Technology Group vs. Meli Hotels International
Performance |
| Timeline |
| Wayside Technology |
| Meli Hotels International |
Wayside Technology and Meliá Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wayside Technology and Meliá Hotels
The main advantage of trading using opposite Wayside Technology and Meliá Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wayside Technology 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.| Wayside Technology vs. Meiko Electronics Co | Wayside Technology vs. Arrow Electronics | Wayside Technology vs. Delta Electronics Public | Wayside Technology vs. G III Apparel Group |
| Meliá Hotels vs. ATRESMEDIA | Meliá Hotels vs. PENN NATL GAMING | Meliá Hotels vs. Townsquare Media | Meliá Hotels vs. Universal Entertainment |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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