Correlation Between Suburban Propane and Meli Hotels

Can any of the company-specific risk be diversified away by investing in both Suburban Propane 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 Suburban Propane and Meli Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Suburban Propane Partners and Meli Hotels International, you can compare the effects of market volatilities on Suburban Propane 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 Suburban Propane with a short position of Meli Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suburban Propane and Meli Hotels.

Diversification Opportunities for Suburban Propane and Meli Hotels

-0.51

Correlation Coefficient

Suburban Propane  Meli Hotels

Excellent diversification

The 3 months correlation between Suburban and Meli is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Suburban Propane Partners 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 Suburban Propane 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 Suburban Propane Partners 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 Suburban Propane i.e., Suburban Propane and Meli Hotels go up and down completely randomly.

Pair Corralation between Suburban Propane and Meli Hotels

If you would invest  1,804  in Suburban Propane Partners on October 15, 2024 and sell it today you would earn a total of  7.00  from holding Suburban Propane Partners or generate 0.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Suburban Propane Partners  vs.  Meli Hotels International

Suburban Propane Partners

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Suburban Propane Partners are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Suburban Propane is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Meli Hotels International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Meli Hotels International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Meli Hotels may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Suburban Propane and Meli Hotels

The main advantage of trading using opposite Suburban Propane and Meli Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suburban Propane 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.

The idea behind Suburban Propane Partners and Meli Hotels International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.