Correlation Between Playa Hotels and Big Yellow
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Big Yellow 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 Big Yellow 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 Big Yellow Group, you can compare the effects of market volatilities on Playa Hotels and Big Yellow 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 Big Yellow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Big Yellow.
Diversification Opportunities for Playa Hotels and Big Yellow
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Playa and Big is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Big Yellow Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Yellow Group 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 Big Yellow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Yellow Group has no effect on the direction of Playa Hotels i.e., Playa Hotels and Big Yellow go up and down completely randomly.
Pair Corralation between Playa Hotels and Big Yellow
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 2.93 times more return on investment than Big Yellow. However, Playa Hotels is 2.93 times more volatile than Big Yellow Group. It trades about 0.26 of its potential returns per unit of risk. Big Yellow Group is currently generating about -0.23 per unit of risk. If you would invest 780.00 in Playa Hotels Resorts on September 2, 2024 and sell it today you would earn a total of 140.00 from holding Playa Hotels Resorts or generate 17.95% 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. Big Yellow Group
Performance |
| Timeline |
| Playa Hotels Resorts |
| Big Yellow Group |
Playa Hotels and Big Yellow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Big Yellow
The main advantage of trading using opposite Playa Hotels and Big Yellow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Big Yellow 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 Big Yellow will offset losses from the drop in Big Yellow's long position.| Playa Hotels vs. United States Steel | Playa Hotels vs. RELIANCE STEEL AL | Playa Hotels vs. Insteel Industries | Playa Hotels vs. TELES Informationstechnologien AG |
| Big Yellow vs. Hanison Construction Holdings | Big Yellow vs. FEMALE HEALTH | Big Yellow vs. AM EAGLE OUTFITTERS | Big Yellow vs. AUST AGRICULTURAL |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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