Correlation Between Meliá Hotels and Gladstone Investment
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and Gladstone 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 Gladstone 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 Gladstone Investment, you can compare the effects of market volatilities on Meliá Hotels and Gladstone 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 Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and Gladstone Investment.
Diversification Opportunities for Meliá Hotels and Gladstone Investment
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Meliá and Gladstone is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment 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 Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and Gladstone Investment go up and down completely randomly.
Pair Corralation between Meliá Hotels and Gladstone Investment
Assuming the 90 days horizon Meli Hotels International is expected to generate 5.45 times more return on investment than Gladstone Investment. However, Meliá Hotels is 5.45 times more volatile than Gladstone Investment. It trades about 0.04 of its potential returns per unit of risk. Gladstone Investment is currently generating about 0.1 per unit of risk. If you would invest 523.00 in Meli Hotels International on August 29, 2024 and sell it today you would earn a total of 188.00 from holding Meli Hotels International or generate 35.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.37% |
| Values | Daily Returns |
Meli Hotels International vs. Gladstone Investment
Performance |
| Timeline |
| Meli Hotels International |
| Gladstone Investment |
Meliá Hotels and Gladstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meliá Hotels and Gladstone Investment
The main advantage of trading using opposite Meliá Hotels and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, Gladstone 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 Gladstone Investment will offset losses from the drop in Gladstone Investment'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 |
| Gladstone Investment vs. Citi Trends | Gladstone Investment vs. Ziff Davis | Gladstone Investment vs. Nike Inc | Gladstone Investment vs. Skechers USA |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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