Correlation Between Meliá Hotels and Ameren Illinois
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and Ameren Illinois 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 Ameren Illinois 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 Ameren Illinois, you can compare the effects of market volatilities on Meliá Hotels and Ameren Illinois 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 Ameren Illinois. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and Ameren Illinois.
Diversification Opportunities for Meliá Hotels and Ameren Illinois
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Meliá and Ameren is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Ameren Illinois in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameren Illinois 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 Ameren Illinois. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameren Illinois has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and Ameren Illinois go up and down completely randomly.
Pair Corralation between Meliá Hotels and Ameren Illinois
Assuming the 90 days horizon Meli Hotels International is expected to under-perform the Ameren Illinois. In addition to that, Meliá Hotels is 1.49 times more volatile than Ameren Illinois. It trades about -0.22 of its total potential returns per unit of risk. Ameren Illinois is currently generating about 0.07 per unit of volatility. If you would invest 6,386 in Ameren Illinois on November 3, 2024 and sell it today you would earn a total of 164.00 from holding Ameren Illinois or generate 2.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meli Hotels International vs. Ameren Illinois
Performance |
| Timeline |
| Meli Hotels International |
| Ameren Illinois |
Meliá Hotels and Ameren Illinois Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meliá Hotels and Ameren Illinois
The main advantage of trading using opposite Meliá Hotels and Ameren Illinois positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, Ameren Illinois 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 Ameren Illinois will offset losses from the drop in Ameren Illinois' long position.| Meliá Hotels vs. Videolocity International | Meliá Hotels vs. Xunlei Ltd Adr | Meliá Hotels vs. Oatly Group AB | Meliá Hotels vs. BOS Better Online |
| Ameren Illinois vs. Netflix | Ameren Illinois vs. PowerFleet, | Ameren Illinois vs. Protara Therapeutics | Ameren Illinois vs. Alphabet Inc Class C |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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