Correlation Between Sun Country and Meliá Hotels
Can any of the company-specific risk be diversified away by investing in both Sun Country and Meliá 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 Sun Country and Meliá Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Country Airlines and Meli Hotels International, you can compare the effects of market volatilities on Sun Country and Meliá 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 Sun Country with a short position of Meliá Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and Meliá Hotels.
Diversification Opportunities for Sun Country and Meliá Hotels
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sun and Meliá is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Meli Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meli Hotels International and Sun Country 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 Sun Country Airlines are associated (or correlated) with Meliá Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meli Hotels International has no effect on the direction of Sun Country i.e., Sun Country and Meliá Hotels go up and down completely randomly.
Pair Corralation between Sun Country and Meliá Hotels
Given the investment horizon of 90 days Sun Country Airlines is expected to under-perform the Meliá Hotels. In addition to that, Sun Country is 1.36 times more volatile than Meli Hotels International. It trades about 0.0 of its total potential returns per unit of risk. Meli Hotels International is currently generating about 0.04 per unit of volatility. If you would invest 523.00 in Meli Hotels International on August 29, 2024 and sell it today you would earn a total of 188.00 from holding Meli Hotels International or generate 35.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.98% |
| Values | Daily Returns |
Sun Country Airlines vs. Meli Hotels International
Performance |
| Timeline |
| Sun Country Airlines |
| Meli Hotels International |
Sun Country and Meliá Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Country and Meliá Hotels
The main advantage of trading using opposite Sun Country and Meliá Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country position performs unexpectedly, Meliá 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 Meliá Hotels will offset losses from the drop in Meliá Hotels' long position.| Sun Country vs. Spirit Airlines | Sun Country vs. JetBlue Airways Corp | Sun Country vs. Allegiant Travel | Sun Country vs. Copa Holdings SA |
| Meliá Hotels vs. Origin Materials | Meliá Hotels vs. SBM Offshore NV | Meliá Hotels vs. Ryanair Holdings PLC | Meliá Hotels vs. Albemarle |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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