Correlation Between Sun Life and Meliá Hotels
Can any of the company-specific risk be diversified away by investing in both Sun Life 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 Sun Life and Meliá Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Life Financial and Meli Hotels International, you can compare the effects of market volatilities on Sun Life 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 Sun Life with a short position of Meliá Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Meliá Hotels.
Diversification Opportunities for Sun Life and Meliá Hotels
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sun and Meliá is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial 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 Sun Life 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 Sun Life Financial 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 Sun Life i.e., Sun Life and Meliá Hotels go up and down completely randomly.
Pair Corralation between Sun Life and Meliá Hotels
If you would invest 5,488 in Sun Life Financial on September 1, 2024 and sell it today you would earn a total of 651.00 from holding Sun Life Financial or generate 11.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Life Financial vs. Meli Hotels International
Performance |
| Timeline |
| Sun Life Financial |
| Meli Hotels International |
Sun Life and Meliá Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Meliá Hotels
The main advantage of trading using opposite Sun Life and Meliá Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life 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.| Sun Life vs. Hartford Financial Services | Sun Life vs. Goosehead Insurance | Sun Life vs. International General Insurance | Sun Life vs. Enstar Group Limited |
| 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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