Correlation Between Playa Hotels and ETFS Coffee
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and ETFS Coffee 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 ETFS Coffee 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 ETFS Coffee ETC, you can compare the effects of market volatilities on Playa Hotels and ETFS Coffee 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 ETFS Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and ETFS Coffee.
Diversification Opportunities for Playa Hotels and ETFS Coffee
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Playa and ETFS is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and ETFS Coffee ETC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Coffee ETC 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 ETFS Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Coffee ETC has no effect on the direction of Playa Hotels i.e., Playa Hotels and ETFS Coffee go up and down completely randomly.
Pair Corralation between Playa Hotels and ETFS Coffee
Assuming the 90 days horizon Playa Hotels is expected to generate 2.65 times less return on investment than ETFS Coffee. In addition to that, Playa Hotels is 1.33 times more volatile than ETFS Coffee ETC. It trades about 0.18 of its total potential returns per unit of risk. ETFS Coffee ETC is currently generating about 0.63 per unit of volatility. If you would invest 3,844 in ETFS Coffee ETC on August 31, 2024 and sell it today you would earn a total of 1,415 from holding ETFS Coffee ETC or generate 36.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Playa Hotels Resorts vs. ETFS Coffee ETC
Performance |
| Timeline |
| Playa Hotels Resorts |
| ETFS Coffee ETC |
Playa Hotels and ETFS Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and ETFS Coffee
The main advantage of trading using opposite Playa Hotels and ETFS Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, ETFS Coffee 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 ETFS Coffee will offset losses from the drop in ETFS Coffee's long position.| Playa Hotels vs. Superior Plus Corp | Playa Hotels vs. NMI Holdings | Playa Hotels vs. Origin Agritech | Playa Hotels vs. SIVERS SEMICONDUCTORS AB |
| ETFS Coffee vs. TELES Informationstechnologien AG | ETFS Coffee vs. National Storage Affiliates | ETFS Coffee vs. INFORMATION SVC GRP | ETFS Coffee vs. Datadog |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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