Correlation Between MIRAMAR HOTEL and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both MIRAMAR HOTEL 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 MIRAMAR HOTEL and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MIRAMAR HOTEL INV and Playa Hotels Resorts, you can compare the effects of market volatilities on MIRAMAR HOTEL 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 MIRAMAR HOTEL with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of MIRAMAR HOTEL and Playa Hotels.
Diversification Opportunities for MIRAMAR HOTEL and Playa Hotels
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MIRAMAR and Playa is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding MIRAMAR HOTEL INV 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 MIRAMAR HOTEL 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 MIRAMAR HOTEL INV 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 MIRAMAR HOTEL i.e., MIRAMAR HOTEL and Playa Hotels go up and down completely randomly.
Pair Corralation between MIRAMAR HOTEL and Playa Hotels
Assuming the 90 days trading horizon MIRAMAR HOTEL INV is expected to generate 1.53 times more return on investment than Playa Hotels. However, MIRAMAR HOTEL is 1.53 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 0.07 per unit of risk. If you would invest 72.00 in MIRAMAR HOTEL INV on September 2, 2024 and sell it today you would earn a total of 40.00 from holding MIRAMAR HOTEL INV or generate 55.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MIRAMAR HOTEL INV vs. Playa Hotels Resorts
Performance |
| Timeline |
| MIRAMAR HOTEL INV |
| Playa Hotels Resorts |
MIRAMAR HOTEL and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MIRAMAR HOTEL and Playa Hotels
The main advantage of trading using opposite MIRAMAR HOTEL and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MIRAMAR HOTEL 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.| MIRAMAR HOTEL vs. CECO ENVIRONMENTAL | MIRAMAR HOTEL vs. GigaMedia | MIRAMAR HOTEL vs. LEGACY IRON ORE | MIRAMAR HOTEL vs. BLUESCOPE STEEL |
| Playa Hotels vs. United States Steel | Playa Hotels vs. RELIANCE STEEL AL | Playa Hotels vs. Insteel Industries | Playa Hotels vs. TELES Informationstechnologien AG |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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