Correlation Between Playa Hotels and UNITED UTILITIES
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and UNITED UTILITIES 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 UNITED UTILITIES 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 UNITED UTILITIES GR, you can compare the effects of market volatilities on Playa Hotels and UNITED UTILITIES 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 UNITED UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and UNITED UTILITIES.
Diversification Opportunities for Playa Hotels and UNITED UTILITIES
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Playa and UNITED is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and UNITED UTILITIES GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED UTILITIES 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 UNITED UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED UTILITIES has no effect on the direction of Playa Hotels i.e., Playa Hotels and UNITED UTILITIES go up and down completely randomly.
Pair Corralation between Playa Hotels and UNITED UTILITIES
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 5.12 times more return on investment than UNITED UTILITIES. However, Playa Hotels is 5.12 times more volatile than UNITED UTILITIES GR. It trades about 0.2 of its potential returns per unit of risk. UNITED UTILITIES GR is currently generating about -0.46 per unit of risk. If you would invest 950.00 in Playa Hotels Resorts on October 11, 2024 and sell it today you would earn a total of 220.00 from holding Playa Hotels Resorts or generate 23.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Playa Hotels Resorts vs. UNITED UTILITIES GR
Performance |
| Timeline |
| Playa Hotels Resorts |
| UNITED UTILITIES |
Playa Hotels and UNITED UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and UNITED UTILITIES
The main advantage of trading using opposite Playa Hotels and UNITED UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, UNITED UTILITIES 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 UNITED UTILITIES will offset losses from the drop in UNITED UTILITIES's long position.| Playa Hotels vs. DEVRY EDUCATION GRP | Playa Hotels vs. Laureate Education | Playa Hotels vs. EVS Broadcast Equipment | Playa Hotels vs. COPLAND ROAD CAPITAL |
| UNITED UTILITIES vs. Broadwind | UNITED UTILITIES vs. QUEEN S ROAD | UNITED UTILITIES vs. Broadridge Financial Solutions | UNITED UTILITIES vs. SAFEROADS HLDGS |
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 Stocks Directory module to find actively traded stocks across global markets.
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