Correlation Between Meliá Hotels and ServiceNow
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and ServiceNow 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 ServiceNow 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 ServiceNow, you can compare the effects of market volatilities on Meliá Hotels and ServiceNow 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 ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and ServiceNow.
Diversification Opportunities for Meliá Hotels and ServiceNow
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Meliá and ServiceNow is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow 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 ServiceNow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServiceNow has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and ServiceNow go up and down completely randomly.
Pair Corralation between Meliá Hotels and ServiceNow
Assuming the 90 days horizon Meliá Hotels is expected to generate 1.97 times less return on investment than ServiceNow. In addition to that, Meliá Hotels is 1.06 times more volatile than ServiceNow. It trades about 0.05 of its total potential returns per unit of risk. ServiceNow is currently generating about 0.09 per unit of volatility. If you would invest 69,626 in ServiceNow on September 3, 2024 and sell it today you would earn a total of 35,318 from holding ServiceNow or generate 50.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.61% |
| Values | Daily Returns |
Meli Hotels International vs. ServiceNow
Performance |
| Timeline |
| Meli Hotels International |
| ServiceNow |
Meliá Hotels and ServiceNow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meliá Hotels and ServiceNow
The main advantage of trading using opposite Meliá Hotels and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, ServiceNow 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 ServiceNow will offset losses from the drop in ServiceNow's long position.| Meliá Hotels vs. Nike Inc | Meliá Hotels vs. Duluth Holdings | Meliá Hotels vs. Kontoor Brands | Meliá Hotels vs. Summit Materials |
| ServiceNow vs. Zoom Video Communications | ServiceNow vs. C3 Ai Inc | ServiceNow vs. Salesforce | ServiceNow vs. Workday |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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