Correlation Between Procter Gamble and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Procter Gamble 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 Procter Gamble and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Playa Hotels Resorts, you can compare the effects of market volatilities on Procter Gamble 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 Procter Gamble with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Playa Hotels.
Diversification Opportunities for Procter Gamble and Playa Hotels
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and Playa is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble 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 Procter Gamble 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 Procter Gamble 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 Procter Gamble i.e., Procter Gamble and Playa Hotels go up and down completely randomly.
Pair Corralation between Procter Gamble and Playa Hotels
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 2.4 times less return on investment than Playa Hotels. But when comparing it to its historical volatility, Procter Gamble is 2.26 times less risky than Playa Hotels. It trades about 0.05 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 751.00 in Playa Hotels Resorts on November 1, 2024 and sell it today you would earn a total of 497.00 from holding Playa Hotels Resorts or generate 66.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Playa Hotels Resorts
Performance |
| Timeline |
| Procter Gamble |
| Playa Hotels Resorts |
Procter Gamble and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Playa Hotels
The main advantage of trading using opposite Procter Gamble and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble 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.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies |
| Playa Hotels vs. Golden Entertainment | Playa Hotels vs. Red Rock Resorts | Playa Hotels vs. Century Casinos | Playa Hotels vs. Studio City International |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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