Correlation Between TRANSAT AT and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both TRANSAT AT and Playa 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 TRANSAT AT and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRANSAT AT VAR and Playa Hotels Resorts, you can compare the effects of market volatilities on TRANSAT AT and Playa 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 TRANSAT AT with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRANSAT AT and Playa Hotels.
Diversification Opportunities for TRANSAT AT and Playa Hotels
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TRANSAT and Playa is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding TRANSAT AT VAR and Playa Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playa Hotels Resorts and TRANSAT AT 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 TRANSAT AT VAR are associated (or correlated) with Playa Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playa Hotels Resorts has no effect on the direction of TRANSAT AT i.e., TRANSAT AT and Playa Hotels go up and down completely randomly.
Pair Corralation between TRANSAT AT and Playa Hotels
Assuming the 90 days horizon TRANSAT AT is expected to generate 1.66 times less return on investment than Playa Hotels. In addition to that, TRANSAT AT is 2.01 times more volatile than Playa Hotels Resorts. It trades about 0.07 of its total potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.23 per unit of volatility. If you would invest 1,220 in Playa Hotels Resorts on December 4, 2024 and sell it today you would earn a total of 60.00 from holding Playa Hotels Resorts or generate 4.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRANSAT AT VAR vs. Playa Hotels Resorts
Performance |
| Timeline |
| TRANSAT AT VAR |
| Playa Hotels Resorts |
TRANSAT AT and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRANSAT AT and Playa Hotels
The main advantage of trading using opposite TRANSAT AT and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRANSAT AT position performs unexpectedly, Playa 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 Playa Hotels will offset losses from the drop in Playa Hotels' long position.| TRANSAT AT vs. Focus Home Interactive | TRANSAT AT vs. Motorcar Parts of | TRANSAT AT vs. BOVIS HOMES GROUP | TRANSAT AT vs. OFFICE DEPOT |
| Playa Hotels vs. PennantPark Investment | Playa Hotels vs. New Residential Investment | Playa Hotels vs. AGNC Investment Corp | Playa Hotels vs. ADRIATIC METALS LS 013355 |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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