Correlation Between Transport International and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Transport International 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 Transport International and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transport International Holdings and Playa Hotels Resorts, you can compare the effects of market volatilities on Transport International 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 Transport International with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and Playa Hotels.
Diversification Opportunities for Transport International and Playa Hotels
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Transport and Playa is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin 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 Transport International 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 Transport International Holdings 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 Transport International i.e., Transport International and Playa Hotels go up and down completely randomly.
Pair Corralation between Transport International and Playa Hotels
Assuming the 90 days horizon Transport International Holdings is expected to generate 2.55 times more return on investment than Playa Hotels. However, Transport International is 2.55 times more volatile than Playa Hotels Resorts. It trades about 0.07 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.06 per unit of risk. If you would invest 27.00 in Transport International Holdings on September 3, 2024 and sell it today you would earn a total of 69.00 from holding Transport International Holdings or generate 255.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transport International Holdin vs. Playa Hotels Resorts
Performance |
| Timeline |
| Transport International |
| Playa Hotels Resorts |
Transport International and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transport International and Playa Hotels
The main advantage of trading using opposite Transport International and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport International 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.| Transport International vs. Superior Plus Corp | Transport International vs. NMI Holdings | Transport International vs. Origin Agritech | Transport International vs. SIVERS SEMICONDUCTORS AB |
| Playa Hotels vs. SBA Communications Corp | Playa Hotels vs. Datadog | Playa Hotels vs. Consolidated Communications Holdings | Playa Hotels vs. Ribbon Communications |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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