Correlation Between Playa Hotels and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Merit Medical 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 Merit Medical 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 Merit Medical Systems, you can compare the effects of market volatilities on Playa Hotels and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Merit Medical.
Diversification Opportunities for Playa Hotels and Merit Medical
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Playa and Merit is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of Playa Hotels i.e., Playa Hotels and Merit Medical go up and down completely randomly.
Pair Corralation between Playa Hotels and Merit Medical
Given the investment horizon of 90 days Playa Hotels Resorts is expected to generate 1.51 times more return on investment than Merit Medical. However, Playa Hotels is 1.51 times more volatile than Merit Medical Systems. It trades about 0.28 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.31 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 118.00 from holding Playa Hotels Resorts or generate 13.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Merit Medical Systems
Performance |
| Timeline |
| Playa Hotels Resorts |
| Merit Medical Systems |
Playa Hotels and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Merit Medical
The main advantage of trading using opposite Playa Hotels and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.| Playa Hotels vs. Yatra Online | Playa Hotels vs. Mondee Holdings | Playa Hotels vs. TripAdvisor | Playa Hotels vs. Thayer Ventures Acquisition |
| Merit Medical vs. Heartbeam | Merit Medical vs. EUDA Health Holdings | Merit Medical vs. Nutex Health | Merit Medical vs. Healthcare Triangle |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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