Correlation Between Playa Hotels and Diversified Healthcare
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Diversified Healthcare 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 Diversified Healthcare 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 Diversified Healthcare Trust, you can compare the effects of market volatilities on Playa Hotels and Diversified Healthcare 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 Diversified Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Diversified Healthcare.
Diversification Opportunities for Playa Hotels and Diversified Healthcare
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Playa and Diversified is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Diversified Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Healthcare 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 Diversified Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Healthcare has no effect on the direction of Playa Hotels i.e., Playa Hotels and Diversified Healthcare go up and down completely randomly.
Pair Corralation between Playa Hotels and Diversified Healthcare
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 2.81 times more return on investment than Diversified Healthcare. However, Playa Hotels is 2.81 times more volatile than Diversified Healthcare Trust. It trades about 0.19 of its potential returns per unit of risk. Diversified Healthcare Trust is currently generating about -0.31 per unit of risk. If you would invest 975.00 in Playa Hotels Resorts on October 12, 2024 and sell it today you would earn a total of 215.00 from holding Playa Hotels Resorts or generate 22.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Diversified Healthcare Trust
Performance |
| Timeline |
| Playa Hotels Resorts |
| Diversified Healthcare |
Playa Hotels and Diversified Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Diversified Healthcare
The main advantage of trading using opposite Playa Hotels and Diversified Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Diversified Healthcare 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 Diversified Healthcare will offset losses from the drop in Diversified Healthcare's long position.| Playa Hotels vs. GAMESTOP | Playa Hotels vs. GigaMedia | Playa Hotels vs. SWISS WATER DECAFFCOFFEE | Playa Hotels vs. VARIOUS EATERIES LS |
| Diversified Healthcare vs. Apple Inc | Diversified Healthcare vs. Apple Inc | Diversified Healthcare vs. Apple Inc | Diversified Healthcare 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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