Correlation Between Playa Hotels and MIRAMAR HOTEL
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and MIRAMAR HOTEL 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 MIRAMAR HOTEL 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 MIRAMAR HOTEL INV, you can compare the effects of market volatilities on Playa Hotels and MIRAMAR HOTEL 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 MIRAMAR HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and MIRAMAR HOTEL.
Diversification Opportunities for Playa Hotels and MIRAMAR HOTEL
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Playa and MIRAMAR is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and MIRAMAR HOTEL INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIRAMAR HOTEL INV 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 MIRAMAR HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIRAMAR HOTEL INV has no effect on the direction of Playa Hotels i.e., Playa Hotels and MIRAMAR HOTEL go up and down completely randomly.
Pair Corralation between Playa Hotels and MIRAMAR HOTEL
Assuming the 90 days horizon Playa Hotels is expected to generate 1.57 times less return on investment than MIRAMAR HOTEL. But when comparing it to its historical volatility, Playa Hotels Resorts is 1.53 times less risky than MIRAMAR HOTEL. It trades about 0.07 of its potential returns per unit of risk. MIRAMAR HOTEL INV is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 72.00 in MIRAMAR HOTEL INV on September 2, 2024 and sell it today you would earn a total of 40.00 from holding MIRAMAR HOTEL INV or generate 55.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. MIRAMAR HOTEL INV
Performance |
| Timeline |
| Playa Hotels Resorts |
| MIRAMAR HOTEL INV |
Playa Hotels and MIRAMAR HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and MIRAMAR HOTEL
The main advantage of trading using opposite Playa Hotels and MIRAMAR HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, MIRAMAR HOTEL 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 MIRAMAR HOTEL will offset losses from the drop in MIRAMAR HOTEL'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 |
| MIRAMAR HOTEL vs. CECO ENVIRONMENTAL | MIRAMAR HOTEL vs. GigaMedia | MIRAMAR HOTEL vs. LEGACY IRON ORE | MIRAMAR HOTEL vs. BLUESCOPE STEEL |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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