Correlation Between Playa Hotels and Analog Devices
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Analog Devices 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 Analog Devices 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 Analog Devices, you can compare the effects of market volatilities on Playa Hotels and Analog Devices 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 Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Analog Devices.
Diversification Opportunities for Playa Hotels and Analog Devices
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Playa and Analog is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices 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 Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of Playa Hotels i.e., Playa Hotels and Analog Devices go up and down completely randomly.
Pair Corralation between Playa Hotels and Analog Devices
Given the investment horizon of 90 days Playa Hotels is expected to generate 1.15 times less return on investment than Analog Devices. But when comparing it to its historical volatility, Playa Hotels Resorts is 2.45 times less risky than Analog Devices. It trades about 0.36 of its potential returns per unit of risk. Analog Devices is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 21,542 in Analog Devices on November 28, 2024 and sell it today you would earn a total of 1,988 from holding Analog Devices or generate 9.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Analog Devices
Performance |
| Timeline |
| Playa Hotels Resorts |
| Analog Devices |
Playa Hotels and Analog Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Analog Devices
The main advantage of trading using opposite Playa Hotels and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Analog Devices 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 Analog Devices will offset losses from the drop in Analog Devices' long position.| Playa Hotels vs. Golden Entertainment | Playa Hotels vs. Red Rock Resorts | Playa Hotels vs. Century Casinos | Playa Hotels vs. Studio City International |
| Analog Devices vs. NXP Semiconductors NV | Analog Devices vs. Qualcomm Incorporated | Analog Devices vs. Broadcom | Analog Devices vs. Microchip Technology |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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