Correlation Between Playa Hotels and BRP
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and BRP 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 BRP 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 BRP Inc, you can compare the effects of market volatilities on Playa Hotels and BRP 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 BRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and BRP.
Diversification Opportunities for Playa Hotels and BRP
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Playa and BRP is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc 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 BRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRP Inc has no effect on the direction of Playa Hotels i.e., Playa Hotels and BRP go up and down completely randomly.
Pair Corralation between Playa Hotels and BRP
Given the investment horizon of 90 days Playa Hotels is expected to generate 3.4 times less return on investment than BRP. But when comparing it to its historical volatility, Playa Hotels Resorts is 2.02 times less risky than BRP. It trades about 0.11 of its potential returns per unit of risk. BRP Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,813 in BRP Inc on September 13, 2024 and sell it today you would earn a total of 462.00 from holding BRP Inc or generate 9.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. BRP Inc
Performance |
| Timeline |
| Playa Hotels Resorts |
| BRP Inc |
Playa Hotels and BRP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and BRP
The main advantage of trading using opposite Playa Hotels and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, BRP 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 BRP will offset losses from the drop in BRP'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 |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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