Correlation Between Playa Hotels and Marriot Vacations
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Marriot Vacations 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 Marriot Vacations 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 Marriot Vacations Worldwide, you can compare the effects of market volatilities on Playa Hotels and Marriot Vacations 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 Marriot Vacations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Marriot Vacations.
Diversification Opportunities for Playa Hotels and Marriot Vacations
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Playa and Marriot is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Marriot Vacations Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriot Vacations 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 Marriot Vacations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marriot Vacations has no effect on the direction of Playa Hotels i.e., Playa Hotels and Marriot Vacations go up and down completely randomly.
Pair Corralation between Playa Hotels and Marriot Vacations
Given the investment horizon of 90 days Playa Hotels is expected to generate 1.57 times less return on investment than Marriot Vacations. But when comparing it to its historical volatility, Playa Hotels Resorts is 1.61 times less risky than Marriot Vacations. It trades about 0.25 of its potential returns per unit of risk. Marriot Vacations Worldwide is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 7,966 in Marriot Vacations Worldwide on August 27, 2024 and sell it today you would earn a total of 1,441 from holding Marriot Vacations Worldwide or generate 18.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Marriot Vacations Worldwide
Performance |
| Timeline |
| Playa Hotels Resorts |
| Marriot Vacations |
Playa Hotels and Marriot Vacations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Marriot Vacations
The main advantage of trading using opposite Playa Hotels and Marriot Vacations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Marriot Vacations 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 Marriot Vacations will offset losses from the drop in Marriot Vacations' long position.| Playa Hotels vs. Yatra Online | Playa Hotels vs. Mondee Holdings | Playa Hotels vs. Tuniu Corp | Playa Hotels vs. TripAdvisor |
| Marriot Vacations vs. Vail Resorts | Marriot Vacations vs. Monarch Casino Resort | Marriot Vacations vs. Studio City International | Marriot Vacations vs. Hilton Grand Vacations |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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