Correlation Between Playa Hotels and Varta AG
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Varta AG 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 Varta AG 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 Varta AG, you can compare the effects of market volatilities on Playa Hotels and Varta AG 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 Varta AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Varta AG.
Diversification Opportunities for Playa Hotels and Varta AG
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Playa and Varta is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Varta AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varta AG 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 Varta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varta AG has no effect on the direction of Playa Hotels i.e., Playa Hotels and Varta AG go up and down completely randomly.
Pair Corralation between Playa Hotels and Varta AG
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 0.53 times more return on investment than Varta AG. However, Playa Hotels Resorts is 1.9 times less risky than Varta AG. It trades about 0.22 of its potential returns per unit of risk. Varta AG is currently generating about -0.37 per unit of risk. If you would invest 805.00 in Playa Hotels Resorts on August 30, 2024 and sell it today you would earn a total of 125.00 from holding Playa Hotels Resorts or generate 15.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Varta AG
Performance |
| Timeline |
| Playa Hotels Resorts |
| Varta AG |
Playa Hotels and Varta AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Varta AG
The main advantage of trading using opposite Playa Hotels and Varta AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Varta AG 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 Varta AG will offset losses from the drop in Varta AG's long position.| Playa Hotels vs. ARDAGH METAL PACDL 0001 | Playa Hotels vs. FIREWEED METALS P | Playa Hotels vs. SERI INDUSTRIAL EO | Playa Hotels vs. INSURANCE AUST GRP |
| Varta AG vs. Nippon Steel | Varta AG vs. CECO ENVIRONMENTAL | Varta AG vs. Playa Hotels Resorts | Varta AG vs. COVIVIO HOTELS INH |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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