Correlation Between Studio City and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Studio City 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 Studio City and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Studio City International and Playa Hotels Resorts, you can compare the effects of market volatilities on Studio City 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 Studio City with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Studio City and Playa Hotels.
Diversification Opportunities for Studio City and Playa Hotels
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Studio and Playa is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Studio City International 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 Studio City 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 Studio City International 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 Studio City i.e., Studio City and Playa Hotels go up and down completely randomly.
Pair Corralation between Studio City and Playa Hotels
Considering the 90-day investment horizon Studio City is expected to generate 1.83 times less return on investment than Playa Hotels. In addition to that, Studio City is 1.45 times more volatile than Playa Hotels Resorts. It trades about 0.11 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 872.00 in Playa Hotels Resorts on August 28, 2024 and sell it today you would earn a total of 118.00 from holding Playa Hotels Resorts or generate 13.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Studio City International vs. Playa Hotels Resorts
Performance |
| Timeline |
| Studio City International |
| Playa Hotels Resorts |
Studio City and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Studio City and Playa Hotels
The main advantage of trading using opposite Studio City and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Studio City 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.| Studio City vs. Golden Entertainment | Studio City vs. Red Rock Resorts | Studio City vs. Century Casinos | Studio City vs. Ballys Corp |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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