Correlation Between TOTAL GABON and MELIA HOTELS
Can any of the company-specific risk be diversified away by investing in both TOTAL GABON 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 TOTAL GABON and MELIA HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOTAL GABON and MELIA HOTELS, you can compare the effects of market volatilities on TOTAL GABON 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 TOTAL GABON with a short position of MELIA HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOTAL GABON and MELIA HOTELS.
Diversification Opportunities for TOTAL GABON and MELIA HOTELS
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between TOTAL and MELIA is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding TOTAL GABON and MELIA HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MELIA HOTELS and TOTAL GABON 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 TOTAL GABON 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 TOTAL GABON i.e., TOTAL GABON and MELIA HOTELS go up and down completely randomly.
Pair Corralation between TOTAL GABON and MELIA HOTELS
Assuming the 90 days trading horizon TOTAL GABON is expected to generate 0.77 times more return on investment than MELIA HOTELS. However, TOTAL GABON is 1.3 times less risky than MELIA HOTELS. It trades about 0.06 of its potential returns per unit of risk. MELIA HOTELS is currently generating about 0.04 per unit of risk. If you would invest 12,348 in TOTAL GABON on September 3, 2024 and sell it today you would earn a total of 6,052 from holding TOTAL GABON or generate 49.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOTAL GABON vs. MELIA HOTELS
Performance |
| Timeline |
| TOTAL GABON |
| MELIA HOTELS |
TOTAL GABON and MELIA HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOTAL GABON and MELIA HOTELS
The main advantage of trading using opposite TOTAL GABON and MELIA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOTAL GABON 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.| TOTAL GABON vs. TOTAL BANGUN PERSAD | TOTAL GABON vs. TOTAL BANGUN PERSAD | TOTAL GABON vs. TOTAL ENERGY SERVS | TOTAL GABON vs. Anheuser Busch InBev SANV |
| MELIA HOTELS vs. TOTAL GABON | MELIA HOTELS vs. Walgreens Boots Alliance | MELIA HOTELS vs. Peak Resources Limited |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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