Correlation Between Dennys Corp and Meli Hotels
Can any of the company-specific risk be diversified away by investing in both Dennys Corp 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 Dennys Corp and Meli Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dennys Corp and Meli Hotels International, you can compare the effects of market volatilities on Dennys Corp 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 Dennys Corp with a short position of Meli Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dennys Corp and Meli Hotels.
Diversification Opportunities for Dennys Corp and Meli Hotels
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dennys and Meli is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Dennys Corp 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 Dennys Corp 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 Dennys Corp 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 Dennys Corp i.e., Dennys Corp and Meli Hotels go up and down completely randomly.
Pair Corralation between Dennys Corp and Meli Hotels
Given the investment horizon of 90 days Dennys Corp is expected to generate 2.29 times more return on investment than Meli Hotels. However, Dennys Corp is 2.29 times more volatile than Meli Hotels International. It trades about 0.05 of its potential returns per unit of risk. Meli Hotels International is currently generating about 0.1 per unit of risk. If you would invest 586.00 in Dennys Corp on September 12, 2024 and sell it today you would earn a total of 51.00 from holding Dennys Corp or generate 8.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Dennys Corp vs. Meli Hotels International
Performance |
Timeline |
Dennys Corp |
Meli Hotels International |
Dennys Corp and Meli Hotels Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dennys Corp and Meli Hotels
The main advantage of trading using opposite Dennys Corp and Meli Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dennys Corp 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.Dennys Corp vs. Noble Romans | Dennys Corp vs. Good Times Restaurants | Dennys Corp vs. Flanigans Enterprises | Dennys Corp vs. FAT Brands |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |