Correlation Between National Beverage and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both National Beverage 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 National Beverage and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and Playa Hotels Resorts, you can compare the effects of market volatilities on National Beverage 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 National Beverage with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Playa Hotels.
Diversification Opportunities for National Beverage and Playa Hotels
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between National and Playa is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp 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 National Beverage 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 National Beverage Corp 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 National Beverage i.e., National Beverage and Playa Hotels go up and down completely randomly.
Pair Corralation between National Beverage and Playa Hotels
Assuming the 90 days horizon National Beverage Corp is expected to under-perform the Playa Hotels. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 1.06 times less risky than Playa Hotels. The stock trades about -0.05 of its potential returns per unit of risk. The Playa Hotels Resorts is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,200 in Playa Hotels Resorts on November 4, 2024 and sell it today you would lose (10.00) from holding Playa Hotels Resorts or give up 0.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Playa Hotels Resorts
Performance |
| Timeline |
| National Beverage Corp |
| Playa Hotels Resorts |
National Beverage and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Playa Hotels
The main advantage of trading using opposite National Beverage and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage 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.| National Beverage vs. FAST RETAIL ADR | National Beverage vs. H2O Retailing | National Beverage vs. East Africa Metals | National Beverage vs. Jacquet Metal Service |
| Playa Hotels vs. Sixt Leasing SE | Playa Hotels vs. Singapore Reinsurance | Playa Hotels vs. United Insurance Holdings | Playa Hotels vs. FUYO GENERAL LEASE |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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