Correlation Between ARDAGH METAL and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both ARDAGH METAL 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 ARDAGH METAL and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARDAGH METAL PACDL 0001 and Playa Hotels Resorts, you can compare the effects of market volatilities on ARDAGH METAL 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 ARDAGH METAL with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARDAGH METAL and Playa Hotels.
Diversification Opportunities for ARDAGH METAL and Playa Hotels
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ARDAGH and Playa is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding ARDAGH METAL PACDL 0001 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 ARDAGH METAL 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 ARDAGH METAL PACDL 0001 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 ARDAGH METAL i.e., ARDAGH METAL and Playa Hotels go up and down completely randomly.
Pair Corralation between ARDAGH METAL and Playa Hotels
Assuming the 90 days horizon ARDAGH METAL PACDL 0001 is expected to generate 1.85 times more return on investment than Playa Hotels. However, ARDAGH METAL is 1.85 times more volatile than Playa Hotels Resorts. It trades about 0.03 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.02 per unit of risk. If you would invest 296.00 in ARDAGH METAL PACDL 0001 on September 2, 2024 and sell it today you would earn a total of 44.00 from holding ARDAGH METAL PACDL 0001 or generate 14.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARDAGH METAL PACDL 0001 vs. Playa Hotels Resorts
Performance |
| Timeline |
| ARDAGH METAL PACDL |
| Playa Hotels Resorts |
ARDAGH METAL and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARDAGH METAL and Playa Hotels
The main advantage of trading using opposite ARDAGH METAL and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARDAGH METAL 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.| ARDAGH METAL vs. ARISTOCRAT LEISURE | ARDAGH METAL vs. ELMOS SEMICONDUCTOR | ARDAGH METAL vs. USWE SPORTS AB | ARDAGH METAL vs. Playa Hotels Resorts |
| Playa Hotels vs. United States Steel | Playa Hotels vs. RELIANCE STEEL AL | Playa Hotels vs. Insteel Industries | Playa Hotels vs. TELES Informationstechnologien AG |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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