Correlation Between Playa Hotels and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Burlington Stores 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 Burlington Stores 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 Burlington Stores, you can compare the effects of market volatilities on Playa Hotels and Burlington Stores 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 Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Burlington Stores.
Diversification Opportunities for Playa Hotels and Burlington Stores
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Playa and Burlington is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores 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 Burlington Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burlington Stores has no effect on the direction of Playa Hotels i.e., Playa Hotels and Burlington Stores go up and down completely randomly.
Pair Corralation between Playa Hotels and Burlington Stores
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 1.26 times more return on investment than Burlington Stores. However, Playa Hotels is 1.26 times more volatile than Burlington Stores. It trades about 0.25 of its potential returns per unit of risk. Burlington Stores is currently generating about 0.28 per unit of risk. If you would invest 775.00 in Playa Hotels Resorts on September 1, 2024 and sell it today you would earn a total of 135.00 from holding Playa Hotels Resorts or generate 17.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Burlington Stores
Performance |
| Timeline |
| Playa Hotels Resorts |
| Burlington Stores |
Playa Hotels and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Burlington Stores
The main advantage of trading using opposite Playa Hotels and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Burlington Stores 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 Burlington Stores will offset losses from the drop in Burlington Stores' long position.| Playa Hotels vs. JJ SNACK FOODS | Playa Hotels vs. Suntory Beverage Food | Playa Hotels vs. Treasury Wine Estates | Playa Hotels vs. MOLSON RS BEVERAGE |
| Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc |
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.
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