Correlation Between Meliá Hotels and Designer Brands
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and Designer Brands 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 Designer Brands 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 Designer Brands, you can compare the effects of market volatilities on Meliá Hotels and Designer Brands 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 Designer Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and Designer Brands.
Diversification Opportunities for Meliá Hotels and Designer Brands
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Meliá and Designer is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Designer Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Designer Brands 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 Designer Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Designer Brands has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and Designer Brands go up and down completely randomly.
Pair Corralation between Meliá Hotels and Designer Brands
Assuming the 90 days horizon Meli Hotels International is expected to generate 0.47 times more return on investment than Designer Brands. However, Meli Hotels International is 2.12 times less risky than Designer Brands. It trades about 0.02 of its potential returns per unit of risk. Designer Brands is currently generating about -0.01 per unit of risk. If you would invest 632.00 in Meli Hotels International on November 2, 2024 and sell it today you would earn a total of 46.00 from holding Meli Hotels International or generate 7.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.77% |
| Values | Daily Returns |
Meli Hotels International vs. Designer Brands
Performance |
| Timeline |
| Meli Hotels International |
| Designer Brands |
Meliá Hotels and Designer Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meliá Hotels and Designer Brands
The main advantage of trading using opposite Meliá Hotels and Designer Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, Designer Brands 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 Designer Brands will offset losses from the drop in Designer Brands' long position.| Meliá Hotels vs. Marriott International | Meliá Hotels vs. Hilton Worldwide Holdings | Meliá Hotels vs. InterContinental Hotels Group | Meliá Hotels vs. Accor SA |
| Designer Brands vs. Wolverine World Wide | Designer Brands vs. Weyco Group | Designer Brands vs. Steven Madden | Designer Brands vs. Rocky Brands |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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