Correlation Between Playa Hotels and Wingstop
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Wingstop 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 Wingstop 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 Wingstop, you can compare the effects of market volatilities on Playa Hotels and Wingstop 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 Wingstop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Wingstop.
Diversification Opportunities for Playa Hotels and Wingstop
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Playa and Wingstop is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Wingstop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wingstop 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 Wingstop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wingstop has no effect on the direction of Playa Hotels i.e., Playa Hotels and Wingstop go up and down completely randomly.
Pair Corralation between Playa Hotels and Wingstop
Given the investment horizon of 90 days Playa Hotels Resorts is expected to generate 0.41 times more return on investment than Wingstop. However, Playa Hotels Resorts is 2.46 times less risky than Wingstop. It trades about 0.27 of its potential returns per unit of risk. Wingstop is currently generating about -0.04 per unit of risk. If you would invest 848.00 in Playa Hotels Resorts on August 24, 2024 and sell it today you would earn a total of 110.00 from holding Playa Hotels Resorts or generate 12.97% 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. Wingstop
Performance |
| Timeline |
| Playa Hotels Resorts |
| Wingstop |
Playa Hotels and Wingstop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Wingstop
The main advantage of trading using opposite Playa Hotels and Wingstop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Wingstop 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 Wingstop will offset losses from the drop in Wingstop'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 |
| Wingstop vs. Papa Johns International | Wingstop vs. Chipotle Mexican Grill | Wingstop vs. The Wendys Co | Wingstop vs. Dominos Pizza |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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