Correlation Between Meli Hotels and Melexis NV
Can any of the company-specific risk be diversified away by investing in both Meli Hotels and Melexis NV 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 Meli Hotels and Melexis NV 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 Melexis NV, you can compare the effects of market volatilities on Meli Hotels and Melexis NV 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 Meli Hotels with a short position of Melexis NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meli Hotels and Melexis NV.
Diversification Opportunities for Meli Hotels and Melexis NV
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Meli and Melexis is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Melexis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melexis NV and Meli 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 Melexis NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melexis NV has no effect on the direction of Meli Hotels i.e., Meli Hotels and Melexis NV go up and down completely randomly.
Pair Corralation between Meli Hotels and Melexis NV
Assuming the 90 days horizon Meli Hotels International is expected to generate 0.6 times more return on investment than Melexis NV. However, Meli Hotels International is 1.65 times less risky than Melexis NV. It trades about 0.04 of its potential returns per unit of risk. Melexis NV is currently generating about 0.02 per unit of risk. If you would invest 595.00 in Meli Hotels International on September 12, 2024 and sell it today you would earn a total of 116.00 from holding Meli Hotels International or generate 19.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.16% |
| Values | Daily Returns |
Meli Hotels International vs. Melexis NV
Performance |
| Timeline |
| Meli Hotels International |
| Melexis NV |
Meli Hotels and Melexis NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meli Hotels and Melexis NV
The main advantage of trading using opposite Meli Hotels and Melexis NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meli Hotels position performs unexpectedly, Melexis NV 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 Melexis NV will offset losses from the drop in Melexis NV's long position.| Meli Hotels vs. Marriott International | Meli Hotels vs. Hilton Worldwide Holdings | Meli Hotels vs. InterContinental Hotels Group | Meli Hotels vs. Accor SA |
| Melexis NV vs. Meli Hotels International | Melexis NV vs. Boyd Gaming | Melexis NV vs. Playtech plc | Melexis NV vs. Sonos Inc |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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