Correlation Between Melia Hotels and Pets At
Can any of the company-specific risk be diversified away by investing in both Melia Hotels and Pets At 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 Melia Hotels and Pets At into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melia Hotels and Pets at Home, you can compare the effects of market volatilities on Melia Hotels and Pets At 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 Melia Hotels with a short position of Pets At. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melia Hotels and Pets At.
Diversification Opportunities for Melia Hotels and Pets At
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Melia and Pets is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Melia Hotels and Pets at Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pets at Home and Melia Hotels 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 Melia Hotels are associated (or correlated) with Pets At. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pets at Home has no effect on the direction of Melia Hotels i.e., Melia Hotels and Pets At go up and down completely randomly.
Pair Corralation between Melia Hotels and Pets At
Assuming the 90 days trading horizon Melia Hotels is expected to generate 0.47 times more return on investment than Pets At. However, Melia Hotels is 2.13 times less risky than Pets At. It trades about 0.17 of its potential returns per unit of risk. Pets at Home is currently generating about -0.21 per unit of risk. If you would invest 661.00 in Melia Hotels on September 19, 2024 and sell it today you would earn a total of 88.00 from holding Melia Hotels or generate 13.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Melia Hotels vs. Pets at Home
Performance |
Timeline |
Melia Hotels |
Pets at Home |
Melia Hotels and Pets At Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Melia Hotels and Pets At
The main advantage of trading using opposite Melia Hotels and Pets At positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melia Hotels position performs unexpectedly, Pets At 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 Pets At will offset losses from the drop in Pets At's long position.Melia Hotels vs. Samsung Electronics Co | Melia Hotels vs. Samsung Electronics Co | Melia Hotels vs. Hyundai Motor | Melia Hotels vs. Reliance Industries Ltd |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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