Correlation Between Meliá Hotels and Fidus Investment
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and Fidus Investment 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 Fidus Investment 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 Fidus Investment Corp, you can compare the effects of market volatilities on Meliá Hotels and Fidus Investment 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 Fidus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and Fidus Investment.
Diversification Opportunities for Meliá Hotels and Fidus Investment
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Meliá and Fidus is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Fidus Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidus Investment 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 Fidus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidus Investment Corp has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and Fidus Investment go up and down completely randomly.
Pair Corralation between Meliá Hotels and Fidus Investment
Assuming the 90 days horizon Meli Hotels International is expected to generate 2.47 times more return on investment than Fidus Investment. However, Meliá Hotels is 2.47 times more volatile than Fidus Investment Corp. It trades about 0.04 of its potential returns per unit of risk. Fidus Investment Corp is currently generating about 0.08 per unit of risk. If you would invest 531.00 in Meli Hotels International on September 3, 2024 and sell it today you would earn a total of 180.00 from holding Meli Hotels International or generate 33.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.98% |
| Values | Daily Returns |
Meli Hotels International vs. Fidus Investment Corp
Performance |
| Timeline |
| Meli Hotels International |
| Fidus Investment Corp |
Meliá Hotels and Fidus Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meliá Hotels and Fidus Investment
The main advantage of trading using opposite Meliá Hotels and Fidus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, Fidus Investment 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 Fidus Investment will offset losses from the drop in Fidus Investment's long position.| Meliá Hotels vs. Nike Inc | Meliá Hotels vs. Duluth Holdings | Meliá Hotels vs. Kontoor Brands | Meliá Hotels vs. Summit Materials |
| Fidus Investment vs. Federated Premier Municipal | Fidus Investment vs. Blackrock Muniyield | Fidus Investment vs. Federated Investors B | Fidus Investment vs. SEI Investments |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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