Correlation Between Kite Realty and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Kite Realty 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 Kite Realty and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kite Realty Group and Playa Hotels Resorts, you can compare the effects of market volatilities on Kite Realty 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 Kite Realty with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kite Realty and Playa Hotels.
Diversification Opportunities for Kite Realty and Playa Hotels
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kite and Playa is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Kite Realty Group 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 Kite Realty 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 Kite Realty Group 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 Kite Realty i.e., Kite Realty and Playa Hotels go up and down completely randomly.
Pair Corralation between Kite Realty and Playa Hotels
Considering the 90-day investment horizon Kite Realty is expected to generate 1.61 times less return on investment than Playa Hotels. But when comparing it to its historical volatility, Kite Realty Group is 1.19 times less risky than Playa Hotels. It trades about 0.05 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 606.00 in Playa Hotels Resorts on September 5, 2024 and sell it today you would earn a total of 403.00 from holding Playa Hotels Resorts or generate 66.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kite Realty Group vs. Playa Hotels Resorts
Performance |
| Timeline |
| Kite Realty Group |
| Playa Hotels Resorts |
Kite Realty and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kite Realty and Playa Hotels
The main advantage of trading using opposite Kite Realty and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kite Realty 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.| Kite Realty vs. Site Centers Corp | Kite Realty vs. CBL Associates Properties | Kite Realty vs. Urban Edge Properties | Kite Realty vs. Acadia Realty Trust |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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