Correlation Between Playa Hotels and Sandstorm Gold
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Sandstorm Gold 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 Sandstorm Gold 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 Sandstorm Gold Ltd, you can compare the effects of market volatilities on Playa Hotels and Sandstorm Gold 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 Sandstorm Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Sandstorm Gold.
Diversification Opportunities for Playa Hotels and Sandstorm Gold
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Playa and Sandstorm is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold 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 Sandstorm Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandstorm Gold has no effect on the direction of Playa Hotels i.e., Playa Hotels and Sandstorm Gold go up and down completely randomly.
Pair Corralation between Playa Hotels and Sandstorm Gold
Given the investment horizon of 90 days Playa Hotels Resorts is expected to generate 0.79 times more return on investment than Sandstorm Gold. However, Playa Hotels Resorts is 1.26 times less risky than Sandstorm Gold. It trades about 0.23 of its potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about -0.06 per unit of risk. If you would invest 872.00 in Playa Hotels Resorts on August 29, 2024 and sell it today you would earn a total of 98.50 from holding Playa Hotels Resorts or generate 11.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Sandstorm Gold Ltd
Performance |
| Timeline |
| Playa Hotels Resorts |
| Sandstorm Gold |
Playa Hotels and Sandstorm Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Sandstorm Gold
The main advantage of trading using opposite Playa Hotels and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Sandstorm Gold 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 Sandstorm Gold will offset losses from the drop in Sandstorm Gold'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 |
| Sandstorm Gold vs. Franco Nevada | Sandstorm Gold vs. Royal Gold | Sandstorm Gold vs. Alamos Gold | Sandstorm Gold vs. Seabridge Gold |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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