Correlation Between RCI Hospitality and Meliá Hotels
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality 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 RCI Hospitality and Meliá Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCI Hospitality Holdings and Meli Hotels International, you can compare the effects of market volatilities on RCI Hospitality 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 RCI Hospitality with a short position of Meliá Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Meliá Hotels.
Diversification Opportunities for RCI Hospitality and Meliá Hotels
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between RCI and Meliá is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings 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 RCI Hospitality 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 RCI Hospitality Holdings 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 RCI Hospitality i.e., RCI Hospitality and Meliá Hotels go up and down completely randomly.
Pair Corralation between RCI Hospitality and Meliá Hotels
Given the investment horizon of 90 days RCI Hospitality Holdings is expected to generate 1.26 times more return on investment than Meliá Hotels. However, RCI Hospitality is 1.26 times more volatile than Meli Hotels International. It trades about 0.05 of its potential returns per unit of risk. Meli Hotels International is currently generating about -0.06 per unit of risk. If you would invest 4,549 in RCI Hospitality Holdings on September 1, 2024 and sell it today you would earn a total of 697.00 from holding RCI Hospitality Holdings or generate 15.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 92.06% |
| Values | Daily Returns |
RCI Hospitality Holdings vs. Meli Hotels International
Performance |
| Timeline |
| RCI Hospitality Holdings |
| Meli Hotels International |
RCI Hospitality and Meliá Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and Meliá Hotels
The main advantage of trading using opposite RCI Hospitality and Meliá Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality 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.| RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys Corp |
| Meliá Hotels vs. Cedar Realty Trust | Meliá Hotels vs. National Beverage Corp | Meliá Hotels vs. Vita Coco | Meliá Hotels vs. Grocery Outlet Holding |
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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