Correlation Between Meliá Hotels and Shake Shack
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and Shake Shack 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 Shake Shack 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 Shake Shack, you can compare the effects of market volatilities on Meliá Hotels and Shake Shack 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 Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and Shake Shack.
Diversification Opportunities for Meliá Hotels and Shake Shack
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Meliá and Shake is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack 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 Shake Shack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shake Shack has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and Shake Shack go up and down completely randomly.
Pair Corralation between Meliá Hotels and Shake Shack
If you would invest 11,426 in Shake Shack on August 28, 2024 and sell it today you would earn a total of 1,516 from holding Shake Shack or generate 13.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meli Hotels International vs. Shake Shack
Performance |
| Timeline |
| Meli Hotels International |
| Shake Shack |
Meliá Hotels and Shake Shack Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meliá Hotels and Shake Shack
The main advantage of trading using opposite Meliá Hotels and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, Shake Shack 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 Shake Shack will offset losses from the drop in Shake Shack'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 |
| Shake Shack vs. Dominos Pizza | Shake Shack vs. Papa Johns International | Shake Shack vs. Chipotle Mexican Grill | Shake Shack vs. Darden Restaurants |
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 Stocks Directory module to find actively traded stocks across global markets.
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