Correlation Between Playa Hotels and Cheniere Energy
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Cheniere Energy 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 Cheniere Energy 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 Cheniere Energy, you can compare the effects of market volatilities on Playa Hotels and Cheniere Energy 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 Cheniere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Cheniere Energy.
Diversification Opportunities for Playa Hotels and Cheniere Energy
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Playa and Cheniere is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Cheniere Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy 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 Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy has no effect on the direction of Playa Hotels i.e., Playa Hotels and Cheniere Energy go up and down completely randomly.
Pair Corralation between Playa Hotels and Cheniere Energy
Assuming the 90 days horizon Playa Hotels is expected to generate 1.06 times less return on investment than Cheniere Energy. In addition to that, Playa Hotels is 1.39 times more volatile than Cheniere Energy. It trades about 0.25 of its total potential returns per unit of risk. Cheniere Energy is currently generating about 0.37 per unit of volatility. If you would invest 17,538 in Cheniere Energy on September 1, 2024 and sell it today you would earn a total of 3,362 from holding Cheniere Energy or generate 19.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Cheniere Energy
Performance |
| Timeline |
| Playa Hotels Resorts |
| Cheniere Energy |
Playa Hotels and Cheniere Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Cheniere Energy
The main advantage of trading using opposite Playa Hotels and Cheniere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Cheniere Energy 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 Cheniere Energy will offset losses from the drop in Cheniere Energy's 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 |
| Cheniere Energy vs. EAT WELL INVESTMENT | Cheniere Energy vs. WisdomTree Investments | Cheniere Energy vs. Playa Hotels Resorts | Cheniere Energy vs. Sunstone Hotel Investors |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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