Correlation Between ScanSource and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both ScanSource 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 ScanSource and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and Playa Hotels Resorts, you can compare the effects of market volatilities on ScanSource 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 ScanSource with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and Playa Hotels.
Diversification Opportunities for ScanSource and Playa Hotels
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ScanSource and Playa is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource 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 ScanSource 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 ScanSource 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 ScanSource i.e., ScanSource and Playa Hotels go up and down completely randomly.
Pair Corralation between ScanSource and Playa Hotels
Assuming the 90 days horizon ScanSource is expected to generate 0.86 times more return on investment than Playa Hotels. However, ScanSource is 1.16 times less risky than Playa Hotels. It trades about 0.17 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.04 per unit of risk. If you would invest 4,640 in ScanSource on October 25, 2024 and sell it today you would earn a total of 180.00 from holding ScanSource or generate 3.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ScanSource vs. Playa Hotels Resorts
Performance |
| Timeline |
| ScanSource |
| Playa Hotels Resorts |
ScanSource and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ScanSource and Playa Hotels
The main advantage of trading using opposite ScanSource and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource 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.| ScanSource vs. GameStop Corp | ScanSource vs. Infrastrutture Wireless Italiane | ScanSource vs. OURGAME INTHOLDL 00005 | ScanSource vs. GigaMedia |
| Playa Hotels vs. National Beverage Corp | Playa Hotels vs. Merit Medical Systems | Playa Hotels vs. The Boston Beer | Playa Hotels vs. PEPTONIC MEDICAL |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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