Correlation Between Supermarket Income and Melia Hotels
Can any of the company-specific risk be diversified away by investing in both Supermarket Income and Melia 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 Supermarket Income and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Supermarket Income REIT and Melia Hotels, you can compare the effects of market volatilities on Supermarket Income and Melia 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 Supermarket Income with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supermarket Income and Melia Hotels.
Diversification Opportunities for Supermarket Income and Melia Hotels
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Supermarket and Melia is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Supermarket Income REIT and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and Supermarket Income 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 Supermarket Income REIT are associated (or correlated) with Melia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melia Hotels has no effect on the direction of Supermarket Income i.e., Supermarket Income and Melia Hotels go up and down completely randomly.
Pair Corralation between Supermarket Income and Melia Hotels
Assuming the 90 days trading horizon Supermarket Income REIT is expected to generate 0.91 times more return on investment than Melia Hotels. However, Supermarket Income REIT is 1.09 times less risky than Melia Hotels. It trades about 0.06 of its potential returns per unit of risk. Melia Hotels is currently generating about -0.05 per unit of risk. If you would invest 7,050 in Supermarket Income REIT on September 2, 2024 and sell it today you would earn a total of 80.00 from holding Supermarket Income REIT or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Supermarket Income REIT vs. Melia Hotels
Performance |
| Timeline |
| Supermarket Income REIT |
| Melia Hotels |
Supermarket Income and Melia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Supermarket Income and Melia Hotels
The main advantage of trading using opposite Supermarket Income and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supermarket Income position performs unexpectedly, Melia 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 Melia Hotels will offset losses from the drop in Melia Hotels' long position.| Supermarket Income vs. Derwent London PLC | Supermarket Income vs. Workspace Group PLC | Supermarket Income vs. Diversified Energy | Supermarket Income vs. Thyssenkrupp AG ON |
| Melia Hotels vs. Monster Beverage Corp | Melia Hotels vs. PureTech Health plc | Melia Hotels vs. Odfjell Drilling | Melia Hotels vs. Synthomer plc |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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