Correlation Between Summit Materials and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Summit Materials 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 Summit Materials and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Playa Hotels Resorts, you can compare the effects of market volatilities on Summit Materials 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 Summit Materials with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Playa Hotels.
Diversification Opportunities for Summit Materials and Playa Hotels
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Summit and Playa is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials 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 Summit Materials 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 Summit Materials 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 Summit Materials i.e., Summit Materials and Playa Hotels go up and down completely randomly.
Pair Corralation between Summit Materials and Playa Hotels
Considering the 90-day investment horizon Summit Materials is expected to generate 1.07 times more return on investment than Playa Hotels. However, Summit Materials is 1.07 times more volatile than Playa Hotels Resorts. It trades about 0.22 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.23 per unit of risk. If you would invest 4,563 in Summit Materials on August 29, 2024 and sell it today you would earn a total of 522.00 from holding Summit Materials or generate 11.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. Playa Hotels Resorts
Performance |
| Timeline |
| Summit Materials |
| Playa Hotels Resorts |
Summit Materials and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Playa Hotels
The main advantage of trading using opposite Summit Materials and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials 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.| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
| Playa Hotels vs. Golden Entertainment | Playa Hotels vs. Red Rock Resorts | Playa Hotels vs. Century Casinos | Playa Hotels vs. Studio City 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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