Correlation Between Playa Hotels and Skechers USA
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Skechers USA 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 Skechers USA 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 Skechers USA, you can compare the effects of market volatilities on Playa Hotels and Skechers USA 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 Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Skechers USA.
Diversification Opportunities for Playa Hotels and Skechers USA
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Playa and Skechers is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA 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 Skechers USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skechers USA has no effect on the direction of Playa Hotels i.e., Playa Hotels and Skechers USA go up and down completely randomly.
Pair Corralation between Playa Hotels and Skechers USA
Given the investment horizon of 90 days Playa Hotels Resorts is expected to generate 0.91 times more return on investment than Skechers USA. However, Playa Hotels Resorts is 1.1 times less risky than Skechers USA. It trades about 0.06 of its potential returns per unit of risk. Skechers USA is currently generating about 0.05 per unit of risk. If you would invest 627.00 in Playa Hotels Resorts on August 31, 2024 and sell it today you would earn a total of 352.00 from holding Playa Hotels Resorts or generate 56.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Skechers USA
Performance |
| Timeline |
| Playa Hotels Resorts |
| Skechers USA |
Playa Hotels and Skechers USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Skechers USA
The main advantage of trading using opposite Playa Hotels and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Skechers USA 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 Skechers USA will offset losses from the drop in Skechers USA's long position.| Playa Hotels vs. Vail Resorts | Playa Hotels vs. Monarch Casino Resort | Playa Hotels vs. Hilton Grand Vacations | Playa Hotels vs. Full House Resorts |
| Skechers USA vs. Crocs Inc | Skechers USA vs. On Holding | Skechers USA vs. Nike Inc | Skechers USA vs. Designer Brands |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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