Correlation Between Playa Hotels and Wendys
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Wendys 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 Wendys 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 The Wendys Co, you can compare the effects of market volatilities on Playa Hotels and Wendys 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 Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Wendys.
Diversification Opportunities for Playa Hotels and Wendys
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Playa and Wendys is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys 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 Wendys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Wendys has no effect on the direction of Playa Hotels i.e., Playa Hotels and Wendys go up and down completely randomly.
Pair Corralation between Playa Hotels and Wendys
Given the investment horizon of 90 days Playa Hotels Resorts is expected to generate 1.13 times more return on investment than Wendys. However, Playa Hotels is 1.13 times more volatile than The Wendys Co. It trades about 0.02 of its potential returns per unit of risk. The Wendys Co is currently generating about -0.01 per unit of risk. If you would invest 925.00 in Playa Hotels Resorts on September 2, 2024 and sell it today you would earn a total of 54.00 from holding Playa Hotels Resorts or generate 5.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. The Wendys Co
Performance |
| Timeline |
| Playa Hotels Resorts |
| The Wendys |
Playa Hotels and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Wendys
The main advantage of trading using opposite Playa Hotels and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Wendys 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 Wendys will offset losses from the drop in Wendys' long position.| Playa Hotels vs. Mondee Holdings | Playa Hotels vs. MakeMyTrip Limited | Playa Hotels vs. Tuniu Corp | Playa Hotels vs. TripAdvisor |
| Wendys vs. Yum Brands | Wendys vs. Dominos Pizza | Wendys vs. Darden Restaurants | Wendys vs. Papa Johns International |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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