Correlation Between Meliá Hotels and Dalata Hotel
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and Dalata Hotel 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 Dalata Hotel 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 Dalata Hotel Group, you can compare the effects of market volatilities on Meliá Hotels and Dalata Hotel 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 Dalata Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and Dalata Hotel.
Diversification Opportunities for Meliá Hotels and Dalata Hotel
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Meliá and Dalata is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Dalata Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalata Hotel Group 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 Dalata Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalata Hotel Group has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and Dalata Hotel go up and down completely randomly.
Pair Corralation between Meliá Hotels and Dalata Hotel
Assuming the 90 days horizon Meli Hotels International is expected to generate 17.05 times more return on investment than Dalata Hotel. However, Meliá Hotels is 17.05 times more volatile than Dalata Hotel Group. It trades about 0.1 of its potential returns per unit of risk. Dalata Hotel Group is currently generating about 0.13 per unit of risk. If you would invest 642.00 in Meli Hotels International on August 29, 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meli Hotels International vs. Dalata Hotel Group
Performance |
| Timeline |
| Meli Hotels International |
| Dalata Hotel Group |
Meliá Hotels and Dalata Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meliá Hotels and Dalata Hotel
The main advantage of trading using opposite Meliá Hotels and Dalata Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, Dalata Hotel 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 Dalata Hotel will offset losses from the drop in Dalata Hotel's 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 |
| Dalata Hotel vs. Arrow Electronics | Dalata Hotel vs. Playstudios | Dalata Hotel vs. Doubledown Interactive Co | Dalata Hotel vs. Analog Devices |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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