Correlation Between Playa Hotels and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Raytheon Technologies 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 Playa Hotels and Raytheon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playa Hotels Resorts and Raytheon Technologies Corp, you can compare the effects of market volatilities on Playa Hotels and Raytheon Technologies 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 Playa Hotels with a short position of Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Raytheon Technologies.
Diversification Opportunities for Playa Hotels and Raytheon Technologies
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Playa and Raytheon is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Raytheon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies and Playa Hotels 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 Playa Hotels Resorts are associated (or correlated) with Raytheon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytheon Technologies has no effect on the direction of Playa Hotels i.e., Playa Hotels and Raytheon Technologies go up and down completely randomly.
Pair Corralation between Playa Hotels and Raytheon Technologies
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 2.02 times more return on investment than Raytheon Technologies. However, Playa Hotels is 2.02 times more volatile than Raytheon Technologies Corp. It trades about 0.19 of its potential returns per unit of risk. Raytheon Technologies Corp is currently generating about 0.07 per unit of risk. If you would invest 810.00 in Playa Hotels Resorts on August 31, 2024 and sell it today you would earn a total of 105.00 from holding Playa Hotels Resorts or generate 12.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Raytheon Technologies Corp
Performance |
| Timeline |
| Playa Hotels Resorts |
| Raytheon Technologies |
Playa Hotels and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Raytheon Technologies
The main advantage of trading using opposite Playa Hotels and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Raytheon Technologies 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 Raytheon Technologies will offset losses from the drop in Raytheon Technologies' long position.| Playa Hotels vs. Superior Plus Corp | Playa Hotels vs. NMI Holdings | Playa Hotels vs. Origin Agritech | Playa Hotels vs. SIVERS SEMICONDUCTORS AB |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |