Correlation Between Playa Hotels and Compass Diversified
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Compass Diversified 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 Compass Diversified 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 Compass Diversified Holdings, you can compare the effects of market volatilities on Playa Hotels and Compass Diversified 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 Compass Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Compass Diversified.
Diversification Opportunities for Playa Hotels and Compass Diversified
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Playa and Compass is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Compass Diversified Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Diversified 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 Compass Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Diversified has no effect on the direction of Playa Hotels i.e., Playa Hotels and Compass Diversified go up and down completely randomly.
Pair Corralation between Playa Hotels and Compass Diversified
Given the investment horizon of 90 days Playa Hotels is expected to generate 6.86 times less return on investment than Compass Diversified. In addition to that, Playa Hotels is 1.26 times more volatile than Compass Diversified Holdings. It trades about 0.04 of its total potential returns per unit of risk. Compass Diversified Holdings is currently generating about 0.34 per unit of volatility. If you would invest 2,270 in Compass Diversified Holdings on October 24, 2024 and sell it today you would earn a total of 153.00 from holding Compass Diversified Holdings or generate 6.74% 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. Compass Diversified Holdings
Performance |
| Timeline |
| Playa Hotels Resorts |
| Compass Diversified |
Playa Hotels and Compass Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Compass Diversified
The main advantage of trading using opposite Playa Hotels and Compass Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Compass Diversified 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 Compass Diversified will offset losses from the drop in Compass Diversified's long position.| Playa Hotels vs. Golden Entertainment | Playa Hotels vs. Red Rock Resorts | Playa Hotels vs. Century Casinos | Playa Hotels vs. Studio City International |
| Compass Diversified vs. RCI Hospitality Holdings | Compass Diversified vs. Ballys Corp | Compass Diversified vs. Park Hotels Resorts | Compass Diversified vs. Playa Hotels Resorts |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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