Correlation Between Meliá Hotels and Nike
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and Nike 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 Nike 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 Nike Inc, you can compare the effects of market volatilities on Meliá Hotels and Nike 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 Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and Nike.
Diversification Opportunities for Meliá Hotels and Nike
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meliá and Nike is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and Nike go up and down completely randomly.
Pair Corralation between Meliá Hotels and Nike
Assuming the 90 days horizon Meli Hotels International is expected to generate 0.94 times more return on investment than Nike. However, Meli Hotels International is 1.06 times less risky than Nike. It trades about 0.0 of its potential returns per unit of risk. Nike Inc is currently generating about -0.06 per unit of risk. If you would invest 730.00 in Meli Hotels International on August 25, 2024 and sell it today you would lose (19.00) from holding Meli Hotels International or give up 2.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Meli Hotels International vs. Nike Inc
Performance |
| Timeline |
| Meli Hotels International |
| Nike Inc |
Meliá Hotels and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meliá Hotels and Nike
The main advantage of trading using opposite Meliá Hotels and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike'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 |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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