Correlation Between Playa Hotels and T-Mobile
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and T-Mobile 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 T-Mobile 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 T Mobile, you can compare the effects of market volatilities on Playa Hotels and T-Mobile 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 T-Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and T-Mobile.
Diversification Opportunities for Playa Hotels and T-Mobile
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Playa and T-Mobile is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile 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 T-Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Mobile has no effect on the direction of Playa Hotels i.e., Playa Hotels and T-Mobile go up and down completely randomly.
Pair Corralation between Playa Hotels and T-Mobile
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 2.08 times more return on investment than T-Mobile. However, Playa Hotels is 2.08 times more volatile than T Mobile. It trades about 0.26 of its potential returns per unit of risk. T Mobile is currently generating about 0.41 per unit of risk. If you would invest 785.00 in Playa Hotels Resorts on September 3, 2024 and sell it today you would earn a total of 135.00 from holding Playa Hotels Resorts or generate 17.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. T Mobile
Performance |
| Timeline |
| Playa Hotels Resorts |
| T Mobile |
Playa Hotels and T-Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and T-Mobile
The main advantage of trading using opposite Playa Hotels and T-Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, T-Mobile 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 T-Mobile will offset losses from the drop in T-Mobile's long position.| Playa Hotels vs. SBA Communications Corp | Playa Hotels vs. Datadog | Playa Hotels vs. Consolidated Communications Holdings | Playa Hotels vs. Ribbon Communications |
| T-Mobile vs. Sims Metal Management | T-Mobile vs. Virtus Investment Partners | T-Mobile vs. CeoTronics AG | T-Mobile vs. PennantPark Investment |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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