Correlation Between Meliá Hotels and GEN Restaurant
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and GEN Restaurant 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 GEN Restaurant 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 GEN Restaurant Group,, you can compare the effects of market volatilities on Meliá Hotels and GEN Restaurant 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 GEN Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and GEN Restaurant.
Diversification Opportunities for Meliá Hotels and GEN Restaurant
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Meliá and GEN is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant 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 GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and GEN Restaurant go up and down completely randomly.
Pair Corralation between Meliá Hotels and GEN Restaurant
If you would invest 711.00 in Meli Hotels International on August 27, 2024 and sell it today you would earn a total of 0.00 from holding Meli Hotels International or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meli Hotels International vs. GEN Restaurant Group,
Performance |
| Timeline |
| Meli Hotels International |
| GEN Restaurant Group, |
Meliá Hotels and GEN Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meliá Hotels and GEN Restaurant
The main advantage of trading using opposite Meliá Hotels and GEN Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, GEN Restaurant 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 GEN Restaurant will offset losses from the drop in GEN Restaurant'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 |
| GEN Restaurant vs. Presidio Property Trust | GEN Restaurant vs. EvoAir Holdings | GEN Restaurant vs. AerSale Corp | GEN Restaurant vs. MGIC Investment Corp |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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