Correlation Between Meliá Hotels and Skechers USA
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and Skechers USA 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 Skechers USA 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 Skechers USA, you can compare the effects of market volatilities on Meliá Hotels and Skechers USA 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 Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and Skechers USA.
Diversification Opportunities for Meliá Hotels and Skechers USA
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Meliá and Skechers is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA 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 Skechers USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skechers USA has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and Skechers USA go up and down completely randomly.
Pair Corralation between Meliá Hotels and Skechers USA
Assuming the 90 days horizon Meli Hotels International is expected to generate 1.12 times more return on investment than Skechers USA. However, Meliá Hotels is 1.12 times more volatile than Skechers USA. It trades about 0.05 of its potential returns per unit of risk. Skechers USA is currently generating about 0.02 per unit of risk. If you would invest 569.00 in Meli Hotels International on August 29, 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 Against |
| Strength | Weak |
| Accuracy | 95.58% |
| Values | Daily Returns |
Meli Hotels International vs. Skechers USA
Performance |
| Timeline |
| Meli Hotels International |
| Skechers USA |
Meliá Hotels and Skechers USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meliá Hotels and Skechers USA
The main advantage of trading using opposite Meliá Hotels and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, Skechers USA 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 Skechers USA will offset losses from the drop in Skechers USA'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 |
| Skechers USA vs. Rocky Brands | Skechers USA vs. Steven Madden | Skechers USA vs. Caleres | Skechers USA vs. Weyco 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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