Correlation Between Playa Hotels and FARM 51
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and FARM 51 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 FARM 51 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 FARM 51 GROUP, you can compare the effects of market volatilities on Playa Hotels and FARM 51 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 FARM 51. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and FARM 51.
Diversification Opportunities for Playa Hotels and FARM 51
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Playa and FARM is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and FARM 51 GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARM 51 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 FARM 51. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARM 51 GROUP has no effect on the direction of Playa Hotels i.e., Playa Hotels and FARM 51 go up and down completely randomly.
Pair Corralation between Playa Hotels and FARM 51
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 2.69 times more return on investment than FARM 51. However, Playa Hotels is 2.69 times more volatile than FARM 51 GROUP. It trades about 0.2 of its potential returns per unit of risk. FARM 51 GROUP is currently generating about -0.05 per unit of risk. If you would invest 950.00 in Playa Hotels Resorts on October 11, 2024 and sell it today you would earn a total of 220.00 from holding Playa Hotels Resorts or generate 23.16% 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. FARM 51 GROUP
Performance |
| Timeline |
| Playa Hotels Resorts |
| FARM 51 GROUP |
Playa Hotels and FARM 51 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and FARM 51
The main advantage of trading using opposite Playa Hotels and FARM 51 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, FARM 51 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 FARM 51 will offset losses from the drop in FARM 51's long position.| Playa Hotels vs. DEVRY EDUCATION GRP | Playa Hotels vs. Laureate Education | Playa Hotels vs. EVS Broadcast Equipment | Playa Hotels vs. COPLAND ROAD CAPITAL |
| FARM 51 vs. PKSHA TECHNOLOGY INC | FARM 51 vs. Warner Music Group | FARM 51 vs. BJs Restaurants | FARM 51 vs. ETFS Coffee ETC |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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