Correlation Between Meliá Hotels and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and Playa Hotels 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 Playa Hotels 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 Playa Hotels Resorts, you can compare the effects of market volatilities on Meliá Hotels and Playa Hotels 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 Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and Playa Hotels.
Diversification Opportunities for Meliá Hotels and Playa Hotels
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Meliá and Playa is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Playa Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playa Hotels Resorts 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 Playa Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playa Hotels Resorts has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and Playa Hotels go up and down completely randomly.
Pair Corralation between Meliá Hotels and Playa Hotels
Assuming the 90 days horizon Meli Hotels International is expected to generate 1.38 times more return on investment than Playa Hotels. However, Meliá Hotels is 1.38 times more volatile than Playa Hotels Resorts. It trades about 0.05 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.06 per unit of risk. If you would invest 569.00 in Meli Hotels International on August 24, 2024 and sell it today you would earn a total of 142.00 from holding Meli Hotels International or generate 24.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.6% |
| Values | Daily Returns |
Meli Hotels International vs. Playa Hotels Resorts
Performance |
| Timeline |
| Meli Hotels International |
| Playa Hotels Resorts |
Meliá Hotels and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meliá Hotels and Playa Hotels
The main advantage of trading using opposite Meliá Hotels and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, Playa Hotels 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 Playa Hotels will offset losses from the drop in Playa Hotels' 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 |
| Playa Hotels vs. Golden Entertainment | Playa Hotels vs. Red Rock Resorts | Playa Hotels vs. Century Casinos | Playa Hotels vs. Ballys 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |