Correlation Between Gap, and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Gap, 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 Gap, and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gap, and Playa Hotels Resorts, you can compare the effects of market volatilities on Gap, 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 Gap, with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gap, and Playa Hotels.
Diversification Opportunities for Gap, and Playa Hotels
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gap, and Playa is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, 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 Gap, 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 The Gap, 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 Gap, i.e., Gap, and Playa Hotels go up and down completely randomly.
Pair Corralation between Gap, and Playa Hotels
Considering the 90-day investment horizon Gap, is expected to generate 1.27 times less return on investment than Playa Hotels. In addition to that, Gap, is 1.53 times more volatile than Playa Hotels Resorts. It trades about 0.13 of its total potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.26 per unit of volatility. If you would invest 764.00 in Playa Hotels Resorts on September 12, 2024 and sell it today you would earn a total of 257.00 from holding Playa Hotels Resorts or generate 33.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Gap, vs. Playa Hotels Resorts
Performance |
| Timeline |
| Gap, |
| Playa Hotels Resorts |
Gap, and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gap, and Playa Hotels
The main advantage of trading using opposite Gap, and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gap, 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.The idea behind The Gap, and Playa Hotels Resorts pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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