Correlation Between Playa Hotels and Equinix
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Equinix 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 Equinix 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 Equinix, you can compare the effects of market volatilities on Playa Hotels and Equinix 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 Equinix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Equinix.
Diversification Opportunities for Playa Hotels and Equinix
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Playa and Equinix is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix 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 Equinix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinix has no effect on the direction of Playa Hotels i.e., Playa Hotels and Equinix go up and down completely randomly.
Pair Corralation between Playa Hotels and Equinix
Given the investment horizon of 90 days Playa Hotels is expected to generate 1.74 times less return on investment than Equinix. In addition to that, Playa Hotels is 1.37 times more volatile than Equinix. It trades about 0.07 of its total potential returns per unit of risk. Equinix is currently generating about 0.18 per unit of volatility. If you would invest 74,408 in Equinix on September 1, 2024 and sell it today you would earn a total of 23,740 from holding Equinix or generate 31.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Equinix
Performance |
| Timeline |
| Playa Hotels Resorts |
| Equinix |
Playa Hotels and Equinix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Equinix
The main advantage of trading using opposite Playa Hotels and Equinix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Equinix 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 Equinix will offset losses from the drop in Equinix's long position.| Playa Hotels vs. Yatra Online | Playa Hotels vs. Mondee Holdings | Playa Hotels vs. MakeMyTrip Limited | Playa Hotels vs. Tuniu Corp |
| Equinix vs. Crown Castle | Equinix vs. American Tower Corp | Equinix vs. Iron Mountain Incorporated | Equinix vs. Hannon Armstrong Sustainable |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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