Correlation Between Playa Hotels and Bank of America
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Bank of America 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 Bank of America 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 Verizon Communications, you can compare the effects of market volatilities on Playa Hotels and Bank of America 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 Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Bank of America.
Diversification Opportunities for Playa Hotels and Bank of America
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Playa and Bank is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications 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 Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of Playa Hotels i.e., Playa Hotels and Bank of America go up and down completely randomly.
Pair Corralation between Playa Hotels and Bank of America
Assuming the 90 days horizon Playa Hotels Resorts is expected to under-perform the Bank of America. In addition to that, Playa Hotels is 1.04 times more volatile than Verizon Communications. It trades about -0.06 of its total potential returns per unit of risk. Verizon Communications is currently generating about -0.03 per unit of volatility. If you would invest 3,846 in Verizon Communications on November 1, 2024 and sell it today you would lose (33.00) from holding Verizon Communications or give up 0.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Verizon Communications
Performance |
| Timeline |
| Playa Hotels Resorts |
| Verizon Communications |
Playa Hotels and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Bank of America
The main advantage of trading using opposite Playa Hotels and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| Playa Hotels vs. URBAN OUTFITTERS | Playa Hotels vs. Siemens Healthineers AG | Playa Hotels vs. UNIVMUSIC GRPADR050 | Playa Hotels vs. CLOVER HEALTH INV |
| Bank of America vs. PLAYWAY SA ZY 10 | Bank of America vs. Zoom Video Communications | Bank of America vs. Playa Hotels Resorts | Bank of America vs. Ribbon Communications |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |