Correlation Between Playa Hotels and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and BJs Restaurants 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 BJs Restaurants 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 BJs Restaurants, you can compare the effects of market volatilities on Playa Hotels and BJs Restaurants 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 BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and BJs Restaurants.
Diversification Opportunities for Playa Hotels and BJs Restaurants
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Playa and BJs is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants 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 BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of Playa Hotels i.e., Playa Hotels and BJs Restaurants go up and down completely randomly.
Pair Corralation between Playa Hotels and BJs Restaurants
Given the investment horizon of 90 days Playa Hotels Resorts is expected to generate 0.68 times more return on investment than BJs Restaurants. However, Playa Hotels Resorts is 1.47 times less risky than BJs Restaurants. It trades about 0.07 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.03 per unit of risk. If you would invest 575.00 in Playa Hotels Resorts on August 28, 2024 and sell it today you would earn a total of 415.00 from holding Playa Hotels Resorts or generate 72.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. BJs Restaurants
Performance |
| Timeline |
| Playa Hotels Resorts |
| BJs Restaurants |
Playa Hotels and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and BJs Restaurants
The main advantage of trading using opposite Playa Hotels and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, BJs Restaurants 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 BJs Restaurants will offset losses from the drop in BJs Restaurants' long position.| Playa Hotels vs. Yatra Online | Playa Hotels vs. Mondee Holdings | Playa Hotels vs. TripAdvisor | Playa Hotels vs. Thayer Ventures Acquisition |
| BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. The Cheesecake Factory |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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