Correlation Between Meliá Hotels and Dennys Corp
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and Dennys Corp 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 Dennys Corp 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 Dennys Corp, you can compare the effects of market volatilities on Meliá Hotels and Dennys Corp 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 Dennys Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and Dennys Corp.
Diversification Opportunities for Meliá Hotels and Dennys Corp
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Meliá and Dennys is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Dennys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dennys Corp 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 Dennys Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dennys Corp has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and Dennys Corp go up and down completely randomly.
Pair Corralation between Meliá Hotels and Dennys Corp
Assuming the 90 days horizon Meli Hotels International is expected to generate 0.44 times more return on investment than Dennys Corp. However, Meli Hotels International is 2.29 times less risky than Dennys Corp. It trades about 0.1 of its potential returns per unit of risk. Dennys Corp is currently generating about 0.04 per unit of risk. If you would invest 642.00 in Meli Hotels International on August 28, 2024 and sell it today you would earn a total of 69.00 from holding Meli Hotels International or generate 10.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meli Hotels International vs. Dennys Corp
Performance |
| Timeline |
| Meli Hotels International |
| Dennys Corp |
Meliá Hotels and Dennys Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meliá Hotels and Dennys Corp
The main advantage of trading using opposite Meliá Hotels and Dennys Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, Dennys Corp 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 Dennys Corp will offset losses from the drop in Dennys Corp's long position.| Meliá Hotels vs. Marriott International | Meliá Hotels vs. Hilton Worldwide Holdings | Meliá Hotels vs. InterContinental Hotels Group | Meliá Hotels vs. Accor SA |
| Dennys Corp vs. Brinker International | Dennys Corp vs. Bloomin Brands | Dennys Corp vs. Jack In The | Dennys Corp vs. BJs Restaurants |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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