Correlation Between Canlan Ice and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Canlan Ice 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 Canlan Ice and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canlan Ice Sports and Playa Hotels Resorts, you can compare the effects of market volatilities on Canlan Ice 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 Canlan Ice with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canlan Ice and Playa Hotels.
Diversification Opportunities for Canlan Ice and Playa Hotels
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Canlan and Playa is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports 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 Canlan Ice 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 Canlan Ice Sports 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 Canlan Ice i.e., Canlan Ice and Playa Hotels go up and down completely randomly.
Pair Corralation between Canlan Ice and Playa Hotels
Assuming the 90 days horizon Canlan Ice is expected to generate 15.79 times less return on investment than Playa Hotels. But when comparing it to its historical volatility, Canlan Ice Sports is 11.68 times less risky than Playa Hotels. It trades about 0.18 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 764.00 in Playa Hotels Resorts on August 28, 2024 and sell it today you would earn a total of 226.00 from holding Playa Hotels Resorts or generate 29.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canlan Ice Sports vs. Playa Hotels Resorts
Performance |
| Timeline |
| Canlan Ice Sports |
| Playa Hotels Resorts |
Canlan Ice and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canlan Ice and Playa Hotels
The main advantage of trading using opposite Canlan Ice and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canlan Ice 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.| Canlan Ice vs. HUMANA INC | Canlan Ice vs. Aquagold International | Canlan Ice vs. Barloworld Ltd ADR | Canlan Ice vs. Morningstar Unconstrained Allocation |
| Playa Hotels vs. Yatra Online | Playa Hotels vs. Mondee Holdings | Playa Hotels vs. TripAdvisor | Playa Hotels vs. Thayer Ventures Acquisition |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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