Correlation Between INSURANCE AUST and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both INSURANCE AUST 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 INSURANCE AUST and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INSURANCE AUST GRP and Playa Hotels Resorts, you can compare the effects of market volatilities on INSURANCE AUST 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 INSURANCE AUST with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of INSURANCE AUST and Playa Hotels.
Diversification Opportunities for INSURANCE AUST and Playa Hotels
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INSURANCE and Playa is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP 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 INSURANCE AUST 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 INSURANCE AUST GRP 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 INSURANCE AUST i.e., INSURANCE AUST and Playa Hotels go up and down completely randomly.
Pair Corralation between INSURANCE AUST and Playa Hotels
Assuming the 90 days trading horizon INSURANCE AUST is expected to generate 1.47 times less return on investment than Playa Hotels. But when comparing it to its historical volatility, INSURANCE AUST GRP is 1.86 times less risky than Playa Hotels. It trades about 0.28 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 805.00 in Playa Hotels Resorts on August 30, 2024 and sell it today you would earn a total of 125.00 from holding Playa Hotels Resorts or generate 15.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INSURANCE AUST GRP vs. Playa Hotels Resorts
Performance |
| Timeline |
| INSURANCE AUST GRP |
| Playa Hotels Resorts |
INSURANCE AUST and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INSURANCE AUST and Playa Hotels
The main advantage of trading using opposite INSURANCE AUST and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSURANCE AUST 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.| INSURANCE AUST vs. ScanSource | INSURANCE AUST vs. Canadian Utilities Limited | INSURANCE AUST vs. Selective Insurance Group | INSURANCE AUST vs. HANOVER INSURANCE |
| Playa Hotels vs. ARDAGH METAL PACDL 0001 | Playa Hotels vs. FIREWEED METALS P | Playa Hotels vs. SERI INDUSTRIAL EO | Playa Hotels vs. INSURANCE AUST GRP |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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