Correlation Between Analog Devices and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Analog Devices 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 Analog Devices and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Playa Hotels Resorts, you can compare the effects of market volatilities on Analog Devices 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 Analog Devices with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Playa Hotels.
Diversification Opportunities for Analog Devices and Playa Hotels
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Analog and Playa is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices 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 Analog Devices 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 Analog Devices 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 Analog Devices i.e., Analog Devices and Playa Hotels go up and down completely randomly.
Pair Corralation between Analog Devices and Playa Hotels
Considering the 90-day investment horizon Analog Devices is expected to generate 1.16 times more return on investment than Playa Hotels. However, Analog Devices is 1.16 times more volatile than Playa Hotels Resorts. It trades about 0.17 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.04 per unit of risk. If you would invest 21,806 in Analog Devices on October 26, 2024 and sell it today you would earn a total of 1,029 from holding Analog Devices or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. Playa Hotels Resorts
Performance |
| Timeline |
| Analog Devices |
| Playa Hotels Resorts |
Analog Devices and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Playa Hotels
The main advantage of trading using opposite Analog Devices and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices 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.| Analog Devices vs. NXP Semiconductors NV | Analog Devices vs. Qualcomm Incorporated | Analog Devices vs. Broadcom | Analog Devices vs. Microchip Technology |
| Playa Hotels vs. Golden Entertainment | Playa Hotels vs. Red Rock Resorts | Playa Hotels vs. Century Casinos | Playa Hotels vs. Studio City International |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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