Correlation Between Gaming and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Gaming 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 Gaming and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaming and Leisure and Playa Hotels Resorts, you can compare the effects of market volatilities on Gaming 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 Gaming with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming and Playa Hotels.
Diversification Opportunities for Gaming and Playa Hotels
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gaming and Playa is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Gaming and Leisure 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 Gaming 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 Gaming and Leisure 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 Gaming i.e., Gaming and Playa Hotels go up and down completely randomly.
Pair Corralation between Gaming and Playa Hotels
Assuming the 90 days horizon Gaming and Leisure is expected to under-perform the Playa Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Gaming and Leisure is 1.19 times less risky than Playa Hotels. The stock trades about -0.03 of its potential returns per unit of risk. The Playa Hotels Resorts is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,170 in Playa Hotels Resorts on October 28, 2024 and sell it today you would lose (10.00) from holding Playa Hotels Resorts or give up 0.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaming and Leisure vs. Playa Hotels Resorts
Performance |
| Timeline |
| Gaming and Leisure |
| Playa Hotels Resorts |
Gaming and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaming and Playa Hotels
The main advantage of trading using opposite Gaming and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming 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.The idea behind Gaming and Leisure and Playa Hotels Resorts 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.| Playa Hotels vs. Chunghwa Telecom Co | Playa Hotels vs. Highlight Communications AG | Playa Hotels vs. betterU Education Corp | Playa Hotels vs. G8 EDUCATION |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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