Correlation Between Corporate Office and Meliá Hotels
Can any of the company-specific risk be diversified away by investing in both Corporate Office 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 Corporate Office and Meliá Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Office Properties and Meli Hotels International, you can compare the effects of market volatilities on Corporate Office 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 Corporate Office with a short position of Meliá Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Office and Meliá Hotels.
Diversification Opportunities for Corporate Office and Meliá Hotels
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Corporate and Meliá is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties 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 Corporate Office 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 Corporate Office Properties 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 Corporate Office i.e., Corporate Office and Meliá Hotels go up and down completely randomly.
Pair Corralation between Corporate Office and Meliá Hotels
Assuming the 90 days horizon Corporate Office Properties is expected to generate 1.32 times more return on investment than Meliá Hotels. However, Corporate Office is 1.32 times more volatile than Meli Hotels International. It trades about -0.17 of its potential returns per unit of risk. Meli Hotels International is currently generating about -0.38 per unit of risk. If you would invest 2,931 in Corporate Office Properties on October 24, 2024 and sell it today you would lose (131.00) from holding Corporate Office Properties or give up 4.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corporate Office Properties vs. Meli Hotels International
Performance |
| Timeline |
| Corporate Office Pro |
| Meli Hotels International |
Corporate Office and Meliá Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Office and Meliá Hotels
The main advantage of trading using opposite Corporate Office and Meliá Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Office 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.| Corporate Office vs. Cairo Communication SpA | Corporate Office vs. COMBA TELECOM SYST | Corporate Office vs. Iridium Communications | Corporate Office vs. CHINA EDUCATION GROUP |
| Meliá Hotels vs. DFS Furniture PLC | Meliá Hotels vs. Corporate Office Properties | Meliá Hotels vs. MOBILE FACTORY INC | Meliá Hotels vs. Infrastrutture Wireless Italiane |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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