Correlation Between Golden Entertainment and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Golden Entertainment 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 Golden Entertainment and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Entertainment and Playa Hotels Resorts, you can compare the effects of market volatilities on Golden Entertainment 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 Golden Entertainment with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Entertainment and Playa Hotels.
Diversification Opportunities for Golden Entertainment and Playa Hotels
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Golden and Playa is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Golden Entertainment 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 Golden Entertainment 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 Golden Entertainment 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 Golden Entertainment i.e., Golden Entertainment and Playa Hotels go up and down completely randomly.
Pair Corralation between Golden Entertainment and Playa Hotels
Given the investment horizon of 90 days Golden Entertainment is expected to generate 1.02 times less return on investment than Playa Hotels. In addition to that, Golden Entertainment is 1.11 times more volatile than Playa Hotels Resorts. It trades about 0.26 of its total potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.29 per unit of volatility. If you would invest 848.00 in Playa Hotels Resorts on August 24, 2024 and sell it today you would earn a total of 121.00 from holding Playa Hotels Resorts or generate 14.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Entertainment vs. Playa Hotels Resorts
Performance |
| Timeline |
| Golden Entertainment |
| Playa Hotels Resorts |
Golden Entertainment and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Entertainment and Playa Hotels
The main advantage of trading using opposite Golden Entertainment and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Entertainment 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.| Golden Entertainment vs. Red Rock Resorts | Golden Entertainment vs. Century Casinos | Golden Entertainment vs. Studio City International | Golden Entertainment vs. Ballys Corp |
| Playa Hotels vs. Golden Entertainment | Playa Hotels vs. Red Rock Resorts | Playa Hotels vs. Century Casinos | Playa Hotels vs. Ballys 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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