Correlation Between Franco Nevada and Meli Hotels
Can any of the company-specific risk be diversified away by investing in both Franco Nevada 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 Franco Nevada and Meli Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franco Nevada and Meli Hotels International, you can compare the effects of market volatilities on Franco Nevada 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 Franco Nevada with a short position of Meli Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franco Nevada and Meli Hotels.
Diversification Opportunities for Franco Nevada and Meli Hotels
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Franco and Meli is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Franco Nevada 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 Franco Nevada 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 Franco Nevada 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 Franco Nevada i.e., Franco Nevada and Meli Hotels go up and down completely randomly.
Pair Corralation between Franco Nevada and Meli Hotels
Assuming the 90 days horizon Franco Nevada is expected to generate 1.25 times less return on investment than Meli Hotels. But when comparing it to its historical volatility, Franco Nevada is 1.24 times less risky than Meli Hotels. It trades about 0.13 of its potential returns per unit of risk. Meli Hotels International is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 716.00 in Meli Hotels International on September 17, 2024 and sell it today you would earn a total of 36.00 from holding Meli Hotels International or generate 5.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Franco Nevada vs. Meli Hotels International
Performance |
Timeline |
Franco Nevada |
Meli Hotels International |
Franco Nevada and Meli Hotels Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franco Nevada and Meli Hotels
The main advantage of trading using opposite Franco Nevada and Meli Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franco Nevada 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.Franco Nevada vs. Superior Plus Corp | Franco Nevada vs. SIVERS SEMICONDUCTORS AB | Franco Nevada vs. Norsk Hydro ASA | Franco Nevada vs. Reliance Steel Aluminum |
Meli Hotels vs. Hyatt Hotels | Meli Hotels vs. InterContinental Hotels Group | Meli Hotels vs. INTERCONT HOTELS | Meli Hotels vs. Wyndham Hotels Resorts |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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