Correlation Between Booking Holdings and Playmates Toys
Can any of the company-specific risk be diversified away by investing in both Booking Holdings and Playmates Toys 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 Booking Holdings and Playmates Toys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Booking Holdings and Playmates Toys Limited, you can compare the effects of market volatilities on Booking Holdings and Playmates Toys 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 Booking Holdings with a short position of Playmates Toys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booking Holdings and Playmates Toys.
Diversification Opportunities for Booking Holdings and Playmates Toys
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Booking and Playmates is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Booking Holdings and Playmates Toys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playmates Toys and Booking Holdings 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 Booking Holdings are associated (or correlated) with Playmates Toys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playmates Toys has no effect on the direction of Booking Holdings i.e., Booking Holdings and Playmates Toys go up and down completely randomly.
Pair Corralation between Booking Holdings and Playmates Toys
Assuming the 90 days trading horizon Booking Holdings is expected to generate 0.29 times more return on investment than Playmates Toys. However, Booking Holdings is 3.5 times less risky than Playmates Toys. It trades about 0.12 of its potential returns per unit of risk. Playmates Toys Limited is currently generating about 0.02 per unit of risk. If you would invest 399,505 in Booking Holdings on October 24, 2024 and sell it today you would earn a total of 50,495 from holding Booking Holdings or generate 12.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.33% |
| Values | Daily Returns |
Booking Holdings vs. Playmates Toys Limited
Performance |
| Timeline |
| Booking Holdings |
| Playmates Toys |
Booking Holdings and Playmates Toys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Booking Holdings and Playmates Toys
The main advantage of trading using opposite Booking Holdings and Playmates Toys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Booking Holdings position performs unexpectedly, Playmates Toys 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 Playmates Toys will offset losses from the drop in Playmates Toys' long position.| Booking Holdings vs. American Eagle Outfitters | Booking Holdings vs. SMA Solar Technology | Booking Holdings vs. Kingdee International Software | Booking Holdings vs. DXC Technology Co |
| Playmates Toys vs. Erste Group Bank | Playmates Toys vs. JSC Halyk bank | Playmates Toys vs. Sun Life Financial | Playmates Toys vs. PNC Financial Services |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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