Correlation Between Meliá Hotels and Stagwell
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and Stagwell 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 Stagwell 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 Stagwell, you can compare the effects of market volatilities on Meliá Hotels and Stagwell 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 Stagwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and Stagwell.
Diversification Opportunities for Meliá Hotels and Stagwell
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meliá and Stagwell is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell 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 Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and Stagwell go up and down completely randomly.
Pair Corralation between Meliá Hotels and Stagwell
Assuming the 90 days horizon Meliá Hotels is expected to generate 1.19 times less return on investment than Stagwell. But when comparing it to its historical volatility, Meli Hotels International is 1.79 times less risky than Stagwell. It trades about 0.02 of its potential returns per unit of risk. Stagwell is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 712.00 in Stagwell on November 7, 2024 and sell it today you would lose (76.00) from holding Stagwell or give up 10.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.97% |
| Values | Daily Returns |
Meli Hotels International vs. Stagwell
Performance |
| Timeline |
| Meli Hotels International |
| Stagwell |
Meliá Hotels and Stagwell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meliá Hotels and Stagwell
The main advantage of trading using opposite Meliá Hotels and Stagwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, Stagwell 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 Stagwell will offset losses from the drop in Stagwell's long position.| Meliá Hotels vs. Lion One Metals | Meliá Hotels vs. Compania Cervecerias Unidas | Meliá Hotels vs. Eldorado Gold Corp | Meliá Hotels vs. Altria Group |
| Stagwell vs. Innovid Corp | Stagwell vs. Interpublic Group of | Stagwell vs. Cimpress NV | Stagwell vs. Criteo Sa |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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