Correlation Between Sphere Entertainment and Meli Hotels
Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and Meli 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 Sphere Entertainment and Meli Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sphere Entertainment Co and Meli Hotels International, you can compare the effects of market volatilities on Sphere Entertainment and Meli 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 Sphere Entertainment with a short position of Meli Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and Meli Hotels.
Diversification Opportunities for Sphere Entertainment and Meli Hotels
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sphere and Meli is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co 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 Sphere Entertainment 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 Sphere Entertainment Co are associated (or correlated) with Meli 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 Sphere Entertainment i.e., Sphere Entertainment and Meli Hotels go up and down completely randomly.
Pair Corralation between Sphere Entertainment and Meli Hotels
Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the Meli Hotels. In addition to that, Sphere Entertainment is 1.55 times more volatile than Meli Hotels International. It trades about -0.04 of its total potential returns per unit of risk. Meli Hotels International is currently generating about 0.1 per unit of volatility. If you would invest 642.00 in Meli Hotels International on September 12, 2024 and sell it today you would earn a total of 69.00 from holding Meli Hotels International or generate 10.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Sphere Entertainment Co vs. Meli Hotels International
Performance |
| Timeline |
| Sphere Entertainment |
| Meli Hotels International |
Sphere Entertainment and Meli Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sphere Entertainment and Meli Hotels
The main advantage of trading using opposite Sphere Entertainment and Meli Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, Meli 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 Meli Hotels will offset losses from the drop in Meli Hotels' long position.| Sphere Entertainment vs. Arhaus Inc | Sphere Entertainment vs. Algoma Steel Group | Sphere Entertainment vs. CECO Environmental Corp | Sphere Entertainment vs. The Gap, |
| Meli Hotels vs. Marriott International | Meli Hotels vs. Hilton Worldwide Holdings | Meli Hotels vs. InterContinental Hotels Group | Meli Hotels vs. Accor 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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