Correlation Between CF Industries and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both CF Industries 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 CF Industries and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CF Industries Holdings and Playa Hotels Resorts, you can compare the effects of market volatilities on CF Industries 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 CF Industries with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and Playa Hotels.
Diversification Opportunities for CF Industries and Playa Hotels
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CF Industries and Playa is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries 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 CF Industries 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 CF Industries 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 CF Industries i.e., CF Industries and Playa Hotels go up and down completely randomly.
Pair Corralation between CF Industries and Playa Hotels
Allowing for the 90-day total investment horizon CF Industries is expected to generate 1.46 times less return on investment than Playa Hotels. In addition to that, CF Industries is 1.05 times more volatile than Playa Hotels Resorts. It trades about 0.05 of its total potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.08 per unit of volatility. If you would invest 748.00 in Playa Hotels Resorts on September 2, 2024 and sell it today you would earn a total of 231.00 from holding Playa Hotels Resorts or generate 30.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CF Industries Holdings vs. Playa Hotels Resorts
Performance |
| Timeline |
| CF Industries Holdings |
| Playa Hotels Resorts |
CF Industries and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Industries and Playa Hotels
The main advantage of trading using opposite CF Industries and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries 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.| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals |
| Playa Hotels vs. Mondee Holdings | Playa Hotels vs. MakeMyTrip Limited | Playa Hotels vs. Tuniu Corp | Playa Hotels vs. TripAdvisor |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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