Correlation Between Meliá Hotels and Albertsons Companies
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and Albertsons Companies 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 Meliá Hotels and Albertsons Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meli Hotels International and Albertsons Companies, you can compare the effects of market volatilities on Meliá Hotels and Albertsons Companies 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 Meliá Hotels with a short position of Albertsons Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and Albertsons Companies.
Diversification Opportunities for Meliá Hotels and Albertsons Companies
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Meliá and Albertsons is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Albertsons Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albertsons Companies and Meliá Hotels 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 Meli Hotels International are associated (or correlated) with Albertsons Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albertsons Companies has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and Albertsons Companies go up and down completely randomly.
Pair Corralation between Meliá Hotels and Albertsons Companies
Assuming the 90 days horizon Meli Hotels International is expected to under-perform the Albertsons Companies. In addition to that, Meliá Hotels is 1.74 times more volatile than Albertsons Companies. It trades about -0.06 of its total potential returns per unit of risk. Albertsons Companies is currently generating about -0.01 per unit of volatility. If you would invest 2,030 in Albertsons Companies on September 1, 2024 and sell it today you would lose (45.00) from holding Albertsons Companies or give up 2.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.06% |
| Values | Daily Returns |
Meli Hotels International vs. Albertsons Companies
Performance |
| Timeline |
| Meli Hotels International |
| Albertsons Companies |
Meliá Hotels and Albertsons Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meliá Hotels and Albertsons Companies
The main advantage of trading using opposite Meliá Hotels and Albertsons Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, Albertsons Companies 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 Albertsons Companies will offset losses from the drop in Albertsons Companies' long position.| Meliá Hotels vs. Cedar Realty Trust | Meliá Hotels vs. National Beverage Corp | Meliá Hotels vs. Vita Coco | Meliá Hotels vs. Grocery Outlet Holding |
| Albertsons Companies vs. Ingles Markets Incorporated | Albertsons Companies vs. Grocery Outlet Holding | Albertsons Companies vs. Ocado Group plc | Albertsons Companies vs. Sprouts Farmers Market |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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