Correlation Between Meliá Hotels and Citi Trends
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and Citi Trends 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 Citi Trends 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 Citi Trends, you can compare the effects of market volatilities on Meliá Hotels and Citi Trends 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 Citi Trends. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and Citi Trends.
Diversification Opportunities for Meliá Hotels and Citi Trends
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Meliá and Citi is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Citi Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citi Trends 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 Citi Trends. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citi Trends has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and Citi Trends go up and down completely randomly.
Pair Corralation between Meliá Hotels and Citi Trends
Assuming the 90 days horizon Meli Hotels International is expected to generate 0.77 times more return on investment than Citi Trends. However, Meli Hotels International is 1.29 times less risky than Citi Trends. It trades about 0.05 of its potential returns per unit of risk. Citi Trends is currently generating about -0.01 per unit of risk. If you would invest 473.00 in Meli Hotels International on August 31, 2024 and sell it today you would earn a total of 238.00 from holding Meli Hotels International or generate 50.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.7% |
| Values | Daily Returns |
Meli Hotels International vs. Citi Trends
Performance |
| Timeline |
| Meli Hotels International |
| Citi Trends |
Meliá Hotels and Citi Trends Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meliá Hotels and Citi Trends
The main advantage of trading using opposite Meliá Hotels and Citi Trends positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, Citi Trends 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 Citi Trends will offset losses from the drop in Citi Trends' long position.| Meliá Hotels vs. Marriott International | Meliá Hotels vs. Hilton Worldwide Holdings | Meliá Hotels vs. InterContinental Hotels Group | Meliá Hotels vs. InterContinental Hotels Group |
| Citi Trends vs. JJill Inc | Citi Trends vs. Zumiez Inc | Citi Trends vs. Tillys Inc | Citi Trends vs. Duluth Holdings |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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