Correlation Between NMI Holdings and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both NMI Holdings 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 NMI Holdings and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Playa Hotels Resorts, you can compare the effects of market volatilities on NMI Holdings 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 NMI Holdings with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Playa Hotels.
Diversification Opportunities for NMI Holdings and Playa Hotels
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Playa is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings 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 NMI Holdings 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 NMI Holdings 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 NMI Holdings i.e., NMI Holdings and Playa Hotels go up and down completely randomly.
Pair Corralation between NMI Holdings and Playa Hotels
Assuming the 90 days horizon NMI Holdings is expected to generate 6.74 times less return on investment than Playa Hotels. But when comparing it to its historical volatility, NMI Holdings is 1.39 times less risky than Playa Hotels. It trades about 0.05 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 28, 2024 and sell it today you would earn a total of 120.00 from holding Playa Hotels Resorts or generate 14.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Playa Hotels Resorts
Performance |
| Timeline |
| NMI Holdings |
| Playa Hotels Resorts |
NMI Holdings and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Playa Hotels
The main advantage of trading using opposite NMI Holdings and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings 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.| NMI Holdings vs. Lion Biotechnologies | NMI Holdings vs. Digilife Technologies Limited | NMI Holdings vs. Food Life Companies | NMI Holdings vs. CONAGRA FOODS |
| Playa Hotels vs. Superior Plus Corp | Playa Hotels vs. NMI Holdings | Playa Hotels vs. Origin Agritech | Playa Hotels vs. SIVERS SEMICONDUCTORS AB |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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