Correlation Between Equinix and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Equinix 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 Equinix and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and Playa Hotels Resorts, you can compare the effects of market volatilities on Equinix 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 Equinix with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and Playa Hotels.
Diversification Opportunities for Equinix and Playa Hotels
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Equinix and Playa is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Equinix 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 Equinix 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 Equinix 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 Equinix i.e., Equinix and Playa Hotels go up and down completely randomly.
Pair Corralation between Equinix and Playa Hotels
Given the investment horizon of 90 days Equinix is expected to generate 0.73 times more return on investment than Playa Hotels. However, Equinix is 1.37 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 0.07 per unit of risk. If you would invest 74,408 in Equinix on September 1, 2024 and sell it today you would earn a total of 23,740 from holding Equinix or generate 31.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinix vs. Playa Hotels Resorts
Performance |
| Timeline |
| Equinix |
| Playa Hotels Resorts |
Equinix and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinix and Playa Hotels
The main advantage of trading using opposite Equinix and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix 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.| Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Iron Mountain Incorporated | Equinix vs. Hannon Armstrong Sustainable |
| Playa Hotels vs. Yatra Online | Playa Hotels vs. Mondee Holdings | Playa Hotels vs. MakeMyTrip Limited | Playa Hotels vs. Tuniu Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
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