Correlation Between Reinsurance Group and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Reinsurance Group and Playa Hotels 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 Reinsurance Group and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reinsurance Group of and Playa Hotels Resorts, you can compare the effects of market volatilities on Reinsurance Group and Playa Hotels 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 Reinsurance Group with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reinsurance Group and Playa Hotels.
Diversification Opportunities for Reinsurance Group and Playa Hotels
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Reinsurance and Playa is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and Playa Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playa Hotels Resorts and Reinsurance Group 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 Reinsurance Group of are associated (or correlated) with Playa Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playa Hotels Resorts has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and Playa Hotels go up and down completely randomly.
Pair Corralation between Reinsurance Group and Playa Hotels
Assuming the 90 days trading horizon Reinsurance Group is expected to generate 3.85 times less return on investment than Playa Hotels. But when comparing it to its historical volatility, Reinsurance Group of is 1.59 times less risky than Playa Hotels. It trades about 0.04 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 775.00 in Playa Hotels Resorts on October 17, 2024 and sell it today you would earn a total of 415.00 from holding Playa Hotels Resorts or generate 53.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reinsurance Group of vs. Playa Hotels Resorts
Performance |
| Timeline |
| Reinsurance Group |
| Playa Hotels Resorts |
Reinsurance Group and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reinsurance Group and Playa Hotels
The main advantage of trading using opposite Reinsurance Group and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group position performs unexpectedly, Playa Hotels 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 Playa Hotels will offset losses from the drop in Playa Hotels' long position.| Reinsurance Group vs. MTY Food Group | Reinsurance Group vs. GWILLI FOOD | Reinsurance Group vs. TYSON FOODS A | Reinsurance Group vs. EAT WELL INVESTMENT |
| Playa Hotels vs. Reinsurance Group of | Playa Hotels vs. Zurich Insurance Group | Playa Hotels vs. QBE Insurance Group | Playa Hotels vs. GRENKELEASING Dusseldorf |
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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