Correlation Between Playa Hotels and Ameren Illinois
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Ameren Illinois 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 Ameren Illinois 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 Ameren Illinois, you can compare the effects of market volatilities on Playa Hotels and Ameren Illinois 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 Ameren Illinois. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Ameren Illinois.
Diversification Opportunities for Playa Hotels and Ameren Illinois
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Playa and Ameren is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Ameren Illinois in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameren Illinois 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 Ameren Illinois. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameren Illinois has no effect on the direction of Playa Hotels i.e., Playa Hotels and Ameren Illinois go up and down completely randomly.
Pair Corralation between Playa Hotels and Ameren Illinois
Given the investment horizon of 90 days Playa Hotels Resorts is expected to under-perform the Ameren Illinois. But the stock apears to be less risky and, when comparing its historical volatility, Playa Hotels Resorts is 1.53 times less risky than Ameren Illinois. The stock trades about -0.07 of its potential returns per unit of risk. The Ameren Illinois is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,386 in Ameren Illinois on November 3, 2024 and sell it today you would earn a total of 164.00 from holding Ameren Illinois or generate 2.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Ameren Illinois
Performance |
| Timeline |
| Playa Hotels Resorts |
| Ameren Illinois |
Playa Hotels and Ameren Illinois Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Ameren Illinois
The main advantage of trading using opposite Playa Hotels and Ameren Illinois positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Ameren Illinois 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 Ameren Illinois will offset losses from the drop in Ameren Illinois' long position.| Playa Hotels vs. Golden Entertainment | Playa Hotels vs. Red Rock Resorts | Playa Hotels vs. Century Casinos | Playa Hotels vs. Studio City International |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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