Correlation Between Playa Hotels and SCOTT TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY, you can compare the effects of market volatilities on Playa Hotels and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and SCOTT TECHNOLOGY.
Diversification Opportunities for Playa Hotels and SCOTT TECHNOLOGY
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Playa and SCOTT is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and SCOTT TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOTT TECHNOLOGY has no effect on the direction of Playa Hotels i.e., Playa Hotels and SCOTT TECHNOLOGY go up and down completely randomly.
Pair Corralation between Playa Hotels and SCOTT TECHNOLOGY
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 0.74 times more return on investment than SCOTT TECHNOLOGY. However, Playa Hotels Resorts is 1.34 times less risky than SCOTT TECHNOLOGY. It trades about -0.01 of its potential returns per unit of risk. SCOTT TECHNOLOGY is currently generating about -0.04 per unit of risk. If you would invest 925.00 in Playa Hotels Resorts on September 23, 2024 and sell it today you would lose (5.00) from holding Playa Hotels Resorts or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. SCOTT TECHNOLOGY
Performance |
| Timeline |
| Playa Hotels Resorts |
| SCOTT TECHNOLOGY |
Playa Hotels and SCOTT TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and SCOTT TECHNOLOGY
The main advantage of trading using opposite Playa Hotels and SCOTT TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY will offset losses from the drop in SCOTT TECHNOLOGY's long position.| Playa Hotels vs. Darden Restaurants | Playa Hotels vs. Luckin Coffee | Playa Hotels vs. TRADEGATE | Playa Hotels vs. SWISS WATER DECAFFCOFFEE |
| SCOTT TECHNOLOGY vs. Apple Inc | SCOTT TECHNOLOGY vs. Apple Inc | SCOTT TECHNOLOGY vs. Apple Inc | SCOTT TECHNOLOGY vs. Apple Inc |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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