Correlation Between Skechers USA and Meliá Hotels
Can any of the company-specific risk be diversified away by investing in both Skechers USA 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 Skechers USA and Meliá Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skechers USA and Meli Hotels International, you can compare the effects of market volatilities on Skechers USA 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 Skechers USA with a short position of Meliá Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skechers USA and Meliá Hotels.
Diversification Opportunities for Skechers USA and Meliá Hotels
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Skechers and Meliá is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA 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 Skechers USA 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 Skechers USA 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 Skechers USA i.e., Skechers USA and Meliá Hotels go up and down completely randomly.
Pair Corralation between Skechers USA and Meliá Hotels
Considering the 90-day investment horizon Skechers USA is expected to generate 2.78 times less return on investment than Meliá Hotels. But when comparing it to its historical volatility, Skechers USA is 1.12 times less risky than Meliá Hotels. It trades about 0.02 of its potential returns per unit of risk. Meli Hotels International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 569.00 in Meli Hotels International on August 29, 2024 and sell it today you would earn a total of 142.00 from holding Meli Hotels International or generate 24.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.58% |
| Values | Daily Returns |
Skechers USA vs. Meli Hotels International
Performance |
| Timeline |
| Skechers USA |
| Meli Hotels International |
Skechers USA and Meliá Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skechers USA and Meliá Hotels
The main advantage of trading using opposite Skechers USA and Meliá Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skechers USA 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.| Skechers USA vs. Rocky Brands | Skechers USA vs. Steven Madden | Skechers USA vs. Caleres | Skechers USA vs. Weyco Group |
| Meliá Hotels vs. Marriott International | Meliá Hotels vs. Hilton Worldwide Holdings | Meliá Hotels vs. InterContinental Hotels Group | Meliá Hotels vs. InterContinental Hotels Group |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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