Correlation Between Playa Hotels and Air Lease
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Air Lease 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 Air Lease 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 Air Lease, you can compare the effects of market volatilities on Playa Hotels and Air Lease 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 Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Air Lease.
Diversification Opportunities for Playa Hotels and Air Lease
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Playa and Air is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Playa Hotels i.e., Playa Hotels and Air Lease go up and down completely randomly.
Pair Corralation between Playa Hotels and Air Lease
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 2.53 times more return on investment than Air Lease. However, Playa Hotels is 2.53 times more volatile than Air Lease. It trades about 0.15 of its potential returns per unit of risk. Air Lease is currently generating about -0.03 per unit of risk. If you would invest 915.00 in Playa Hotels Resorts on November 27, 2024 and sell it today you would earn a total of 335.00 from holding Playa Hotels Resorts or generate 36.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Air Lease
Performance |
| Timeline |
| Playa Hotels Resorts |
| Air Lease |
Playa Hotels and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Air Lease
The main advantage of trading using opposite Playa Hotels and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.| Playa Hotels vs. Fukuyama Transporting Co | Playa Hotels vs. Iridium Communications | Playa Hotels vs. FIH MOBILE | Playa Hotels vs. Air Transport Services |
| Air Lease vs. China Telecom | Air Lease vs. PACIFIC ONLINE | Air Lease vs. MUTUIONLINE | Air Lease vs. Lamar Advertising |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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