Correlation Between Playa Hotels and APPLIED MATERIALS
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and APPLIED MATERIALS 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 APPLIED MATERIALS 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 APPLIED MATERIALS, you can compare the effects of market volatilities on Playa Hotels and APPLIED MATERIALS 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 APPLIED MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and APPLIED MATERIALS.
Diversification Opportunities for Playa Hotels and APPLIED MATERIALS
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Playa and APPLIED is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and APPLIED MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLIED MATERIALS 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 APPLIED MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPLIED MATERIALS has no effect on the direction of Playa Hotels i.e., Playa Hotels and APPLIED MATERIALS go up and down completely randomly.
Pair Corralation between Playa Hotels and APPLIED MATERIALS
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 0.84 times more return on investment than APPLIED MATERIALS. However, Playa Hotels Resorts is 1.18 times less risky than APPLIED MATERIALS. It trades about 0.02 of its potential returns per unit of risk. APPLIED MATERIALS is currently generating about -0.14 per unit of risk. If you would invest 915.00 in Playa Hotels Resorts on September 25, 2024 and sell it today you would earn a total of 5.00 from holding Playa Hotels Resorts or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. APPLIED MATERIALS
Performance |
| Timeline |
| Playa Hotels Resorts |
| APPLIED MATERIALS |
Playa Hotels and APPLIED MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and APPLIED MATERIALS
The main advantage of trading using opposite Playa Hotels and APPLIED MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, APPLIED MATERIALS 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 APPLIED MATERIALS will offset losses from the drop in APPLIED MATERIALS's long position.| Playa Hotels vs. CHINA TELECOM H | Playa Hotels vs. Major Drilling Group | Playa Hotels vs. Comba Telecom Systems | Playa Hotels vs. MINCO SILVER |
| APPLIED MATERIALS vs. KRISPY KREME DL 01 | APPLIED MATERIALS vs. Internet Thailand PCL | APPLIED MATERIALS vs. Spirent Communications plc | APPLIED MATERIALS vs. Playa Hotels Resorts |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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