Correlation Between Playa Hotels and WW Grainger
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and WW Grainger 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 WW Grainger 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 WW Grainger, you can compare the effects of market volatilities on Playa Hotels and WW Grainger 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 WW Grainger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and WW Grainger.
Diversification Opportunities for Playa Hotels and WW Grainger
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Playa and GWW is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and WW Grainger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WW Grainger 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 WW Grainger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WW Grainger has no effect on the direction of Playa Hotels i.e., Playa Hotels and WW Grainger go up and down completely randomly.
Pair Corralation between Playa Hotels and WW Grainger
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 6.96 times more return on investment than WW Grainger. However, Playa Hotels is 6.96 times more volatile than WW Grainger. It trades about 0.2 of its potential returns per unit of risk. WW Grainger is currently generating about -0.46 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. WW Grainger
Performance |
| Timeline |
| Playa Hotels Resorts |
| WW Grainger |
Playa Hotels and WW Grainger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and WW Grainger
The main advantage of trading using opposite Playa Hotels and WW Grainger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, WW Grainger 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 WW Grainger will offset losses from the drop in WW Grainger'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 |
| WW Grainger vs. International Consolidated Airlines | WW Grainger vs. Aristocrat Leisure Limited | WW Grainger vs. SINGAPORE AIRLINES | WW Grainger vs. Playa Hotels Resorts |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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