Correlation Between Playa Hotels and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Fast Retailing 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 Fast Retailing 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 Fast Retailing Co, you can compare the effects of market volatilities on Playa Hotels and Fast Retailing 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 Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Fast Retailing.
Diversification Opportunities for Playa Hotels and Fast Retailing
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Playa and Fast is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing 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 Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of Playa Hotels i.e., Playa Hotels and Fast Retailing go up and down completely randomly.
Pair Corralation between Playa Hotels and Fast Retailing
Assuming the 90 days horizon Playa Hotels is expected to generate 1.09 times less return on investment than Fast Retailing. In addition to that, Playa Hotels is 1.02 times more volatile than Fast Retailing Co. It trades about 0.07 of its total potential returns per unit of risk. Fast Retailing Co is currently generating about 0.08 per unit of volatility. If you would invest 23,000 in Fast Retailing Co on September 2, 2024 and sell it today you would earn a total of 8,830 from holding Fast Retailing Co or generate 38.39% 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. Fast Retailing Co
Performance |
| Timeline |
| Playa Hotels Resorts |
| Fast Retailing |
Playa Hotels and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Fast Retailing
The main advantage of trading using opposite Playa Hotels and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Fast Retailing 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 Fast Retailing will offset losses from the drop in Fast Retailing'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 |
| Fast Retailing vs. SIVERS SEMICONDUCTORS AB | Fast Retailing vs. Darden Restaurants | Fast Retailing vs. Reliance Steel Aluminum | Fast Retailing vs. Q2M Managementberatung AG |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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