Correlation Between Playa Hotels and Galaxy Entertainment
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Galaxy Entertainment 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 Galaxy Entertainment 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 Galaxy Entertainment Group, you can compare the effects of market volatilities on Playa Hotels and Galaxy Entertainment 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 Galaxy Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Galaxy Entertainment.
Diversification Opportunities for Playa Hotels and Galaxy Entertainment
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Playa and Galaxy is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Galaxy Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy Entertainment 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 Galaxy Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Entertainment has no effect on the direction of Playa Hotels i.e., Playa Hotels and Galaxy Entertainment go up and down completely randomly.
Pair Corralation between Playa Hotels and Galaxy Entertainment
Given the investment horizon of 90 days Playa Hotels Resorts is expected to generate 0.86 times more return on investment than Galaxy Entertainment. However, Playa Hotels Resorts is 1.16 times less risky than Galaxy Entertainment. It trades about 0.25 of its potential returns per unit of risk. Galaxy Entertainment Group is currently generating about -0.15 per unit of risk. If you would invest 872.00 in Playa Hotels Resorts on August 28, 2024 and sell it today you would earn a total of 105.00 from holding Playa Hotels Resorts or generate 12.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Galaxy Entertainment Group
Performance |
| Timeline |
| Playa Hotels Resorts |
| Galaxy Entertainment |
Playa Hotels and Galaxy Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Galaxy Entertainment
The main advantage of trading using opposite Playa Hotels and Galaxy Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Galaxy Entertainment 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 Galaxy Entertainment will offset losses from the drop in Galaxy Entertainment's long position.| Playa Hotels vs. Yatra Online | Playa Hotels vs. Mondee Holdings | Playa Hotels vs. TripAdvisor | Playa Hotels vs. Thayer Ventures Acquisition |
| Galaxy Entertainment vs. Las Vegas Sands | Galaxy Entertainment vs. MGM Resorts International | Galaxy Entertainment vs. Caesars Entertainment | Galaxy Entertainment vs. Wynn Resorts Limited |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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