Correlation Between Merlin Properties and Millenium Hotels

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

By analyzing existing cross correlation between Merlin Properties SOCIMI and Millenium Hotels Real, you can compare the effects of market volatilities on Merlin Properties and Millenium 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 Merlin Properties with a short position of Millenium Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merlin Properties and Millenium Hotels.

Diversification Opportunities for Merlin Properties and Millenium Hotels

0.75

Correlation Coefficient

Merlin Properties  Millenium Hotels

Poor diversification

The 3 months correlation between Merlin and Millenium is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Merlin Properties SOCIMI and Millenium Hotels Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millenium Hotels Real and Merlin Properties 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 Merlin Properties SOCIMI are associated (or correlated) with Millenium Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millenium Hotels Real has no effect on the direction of Merlin Properties i.e., Merlin Properties and Millenium Hotels go up and down completely randomly.

Pair Corralation between Merlin Properties and Millenium Hotels

Assuming the 90 days trading horizon Merlin Properties is expected to generate 2.58 times less return on investment than Millenium Hotels. But when comparing it to its historical volatility, Merlin Properties SOCIMI is 3.28 times less risky than Millenium Hotels. It trades about 0.3 of its potential returns per unit of risk. Millenium Hotels Real is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  228.00  in Millenium Hotels Real on April 21, 2025 and sell it today you would earn a total of  120.00  from holding Millenium Hotels Real or generate 52.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Merlin Properties SOCIMI  vs.  Millenium Hotels Real

Merlin Properties SOCIMI

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Merlin Properties SOCIMI are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Merlin Properties exhibited solid returns over the last few months and may actually be approaching a breakup point.

Millenium Hotels Real

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Millenium Hotels Real are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Millenium Hotels displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Merlin Properties and Millenium Hotels

The main advantage of trading using opposite Merlin Properties and Millenium Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merlin Properties position performs unexpectedly, Millenium 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 Millenium Hotels will offset losses from the drop in Millenium Hotels' long position.

The idea behind Merlin Properties SOCIMI and Millenium Hotels Real 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.