Correlation Between Meliá Hotels and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both Meliá Hotels and Summit Hotel 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 Meliá Hotels and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meli Hotels International and Summit Hotel Properties, you can compare the effects of market volatilities on Meliá Hotels and Summit Hotel 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 Meliá Hotels with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meliá Hotels and Summit Hotel.
Diversification Opportunities for Meliá Hotels and Summit Hotel
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Meliá and Summit is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and Summit Hotel Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Hotel Properties and Meliá 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 Meli Hotels International are associated (or correlated) with Summit Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Hotel Properties has no effect on the direction of Meliá Hotels i.e., Meliá Hotels and Summit Hotel go up and down completely randomly.
Pair Corralation between Meliá Hotels and Summit Hotel
Assuming the 90 days horizon Meli Hotels International is expected to generate 2.41 times more return on investment than Summit Hotel. However, Meliá Hotels is 2.41 times more volatile than Summit Hotel Properties. It trades about 0.1 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.02 per unit of risk. If you would invest 559.00 in Meli Hotels International on December 8, 2024 and sell it today you would earn a total of 166.00 from holding Meli Hotels International or generate 29.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 15.18% |
Values | Daily Returns |
Meli Hotels International vs. Summit Hotel Properties
Performance |
Timeline |
Meli Hotels International |
Summit Hotel Properties |
Meliá Hotels and Summit Hotel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Meliá Hotels and Summit Hotel
The main advantage of trading using opposite Meliá Hotels and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meliá Hotels position performs unexpectedly, Summit Hotel 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 Summit Hotel will offset losses from the drop in Summit Hotel's long position.Meliá Hotels vs. IPG Photonics | Meliá Hotels vs. Griffon | Meliá Hotels vs. Ryanair Holdings PLC | Meliá Hotels vs. Delek Logistics Partners |
Summit Hotel vs. Diamondrock Hospitality | Summit Hotel vs. RLJ Lodging Trust | Summit Hotel vs. Pebblebrook Hotel Trust | Summit Hotel vs. Sunstone Hotel Investors |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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