Correlation Between Stagwell and Meliá Hotels
Can any of the company-specific risk be diversified away by investing in both Stagwell 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 Stagwell and Meliá Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stagwell and Meli Hotels International, you can compare the effects of market volatilities on Stagwell 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 Stagwell with a short position of Meliá Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stagwell and Meliá Hotels.
Diversification Opportunities for Stagwell and Meliá Hotels
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stagwell and Meliá is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Stagwell 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 Stagwell 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 Stagwell 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 Stagwell i.e., Stagwell and Meliá Hotels go up and down completely randomly.
Pair Corralation between Stagwell and Meliá Hotels
Given the investment horizon of 90 days Stagwell is expected to generate 1.79 times more return on investment than Meliá Hotels. However, Stagwell is 1.79 times more volatile than Meli Hotels International. It trades about 0.01 of its potential returns per unit of risk. Meli Hotels International is currently generating about 0.02 per unit of risk. 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 |
Stagwell vs. Meli Hotels International
Performance |
| Timeline |
| Stagwell |
| Meli Hotels International |
Stagwell and Meliá Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stagwell and Meliá Hotels
The main advantage of trading using opposite Stagwell and Meliá Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stagwell 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.| Stagwell vs. Innovid Corp | Stagwell vs. Interpublic Group of | Stagwell vs. Cimpress NV | Stagwell vs. Criteo Sa |
| Meliá Hotels vs. Lion One Metals | Meliá Hotels vs. Compania Cervecerias Unidas | Meliá Hotels vs. Eldorado Gold Corp | Meliá Hotels vs. Altria 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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