Correlation Between Playa Hotels and FormFactor
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and FormFactor 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 FormFactor 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 FormFactor, you can compare the effects of market volatilities on Playa Hotels and FormFactor 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 FormFactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and FormFactor.
Diversification Opportunities for Playa Hotels and FormFactor
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Playa and FormFactor is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and FormFactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FormFactor 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 FormFactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FormFactor has no effect on the direction of Playa Hotels i.e., Playa Hotels and FormFactor go up and down completely randomly.
Pair Corralation between Playa Hotels and FormFactor
Given the investment horizon of 90 days Playa Hotels is expected to generate 3.9 times less return on investment than FormFactor. But when comparing it to its historical volatility, Playa Hotels Resorts is 1.82 times less risky than FormFactor. It trades about 0.02 of its potential returns per unit of risk. FormFactor is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,107 in FormFactor on September 2, 2024 and sell it today you would earn a total of 899.00 from holding FormFactor or generate 28.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. FormFactor
Performance |
| Timeline |
| Playa Hotels Resorts |
| FormFactor |
Playa Hotels and FormFactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and FormFactor
The main advantage of trading using opposite Playa Hotels and FormFactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, FormFactor 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 FormFactor will offset losses from the drop in FormFactor's long position.| Playa Hotels vs. Mondee Holdings | Playa Hotels vs. MakeMyTrip Limited | Playa Hotels vs. Tuniu Corp | Playa Hotels vs. TripAdvisor |
| FormFactor vs. NXP Semiconductors NV | FormFactor vs. GSI Technology | FormFactor vs. MaxLinear | FormFactor vs. Texas Instruments Incorporated |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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