Correlation Between Life Time and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Life Time 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 Life Time and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Time Group and Playa Hotels Resorts, you can compare the effects of market volatilities on Life Time 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 Life Time with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and Playa Hotels.
Diversification Opportunities for Life Time and Playa Hotels
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Life and Playa is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Life Time 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 Life Time 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 Life Time 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 Life Time i.e., Life Time and Playa Hotels go up and down completely randomly.
Pair Corralation between Life Time and Playa Hotels
Considering the 90-day investment horizon Life Time Group is expected to generate 1.57 times more return on investment than Playa Hotels. However, Life Time is 1.57 times more volatile than Playa Hotels Resorts. It trades about 0.06 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 1,288 in Life Time Group on August 28, 2024 and sell it today you would earn a total of 1,181 from holding Life Time Group or generate 91.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Time Group vs. Playa Hotels Resorts
Performance |
| Timeline |
| Life Time Group |
| Playa Hotels Resorts |
Life Time and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Time and Playa Hotels
The main advantage of trading using opposite Life Time and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time 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.| Life Time vs. Bowlero Corp | Life Time vs. Planet Fitness | Life Time vs. JAKKS Pacific | Life Time vs. Xponential Fitness |
| Playa Hotels vs. Yatra Online | Playa Hotels vs. Mondee Holdings | Playa Hotels vs. TripAdvisor | Playa Hotels vs. Thayer Ventures Acquisition |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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