Correlation Between MSAD INSURANCE and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both MSAD INSURANCE 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 MSAD INSURANCE and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MSAD INSURANCE and Playa Hotels Resorts, you can compare the effects of market volatilities on MSAD INSURANCE 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 MSAD INSURANCE with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSAD INSURANCE and Playa Hotels.
Diversification Opportunities for MSAD INSURANCE and Playa Hotels
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MSAD and Playa is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding MSAD INSURANCE 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 MSAD INSURANCE 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 MSAD INSURANCE 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 MSAD INSURANCE i.e., MSAD INSURANCE and Playa Hotels go up and down completely randomly.
Pair Corralation between MSAD INSURANCE and Playa Hotels
Assuming the 90 days trading horizon MSAD INSURANCE is expected to generate 7.27 times less return on investment than Playa Hotels. But when comparing it to its historical volatility, MSAD INSURANCE is 1.92 times less risky than Playa Hotels. It trades about 0.06 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 805.00 in Playa Hotels Resorts on August 30, 2024 and sell it today you would earn a total of 125.00 from holding Playa Hotels Resorts or generate 15.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
MSAD INSURANCE vs. Playa Hotels Resorts
Performance |
| Timeline |
| MSAD INSURANCE |
| Playa Hotels Resorts |
MSAD INSURANCE and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MSAD INSURANCE and Playa Hotels
The main advantage of trading using opposite MSAD INSURANCE and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSAD INSURANCE 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.| MSAD INSURANCE vs. Gladstone Investment | MSAD INSURANCE vs. CARSALESCOM | MSAD INSURANCE vs. MUTUIONLINE | MSAD INSURANCE vs. REGAL ASIAN INVESTMENTS |
| Playa Hotels vs. ARDAGH METAL PACDL 0001 | Playa Hotels vs. FIREWEED METALS P | Playa Hotels vs. SERI INDUSTRIAL EO | Playa Hotels vs. INSURANCE AUST GRP |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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