Correlation Between Whitehaven Coal and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Whitehaven Coal 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 Whitehaven Coal and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whitehaven Coal Limited and Playa Hotels Resorts, you can compare the effects of market volatilities on Whitehaven Coal 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 Whitehaven Coal with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitehaven Coal and Playa Hotels.
Diversification Opportunities for Whitehaven Coal and Playa Hotels
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Whitehaven and Playa is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Whitehaven Coal Limited 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 Whitehaven Coal 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 Whitehaven Coal Limited 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 Whitehaven Coal i.e., Whitehaven Coal and Playa Hotels go up and down completely randomly.
Pair Corralation between Whitehaven Coal and Playa Hotels
Assuming the 90 days horizon Whitehaven Coal Limited is expected to under-perform the Playa Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Whitehaven Coal Limited is 2.13 times less risky than Playa Hotels. The stock trades about -0.03 of its potential returns per unit of risk. The Playa Hotels Resorts is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 790.00 in Playa Hotels Resorts on October 24, 2024 and sell it today you would earn a total of 390.00 from holding Playa Hotels Resorts or generate 49.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Whitehaven Coal Limited vs. Playa Hotels Resorts
Performance |
| Timeline |
| Whitehaven Coal |
| Playa Hotels Resorts |
Whitehaven Coal and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whitehaven Coal and Playa Hotels
The main advantage of trading using opposite Whitehaven Coal and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whitehaven Coal 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.| Whitehaven Coal vs. JIAHUA STORES | Whitehaven Coal vs. TYSON FOODS A | Whitehaven Coal vs. CAL MAINE FOODS | Whitehaven Coal vs. H2O Retailing |
| Playa Hotels vs. Cairo Communication SpA | Playa Hotels vs. Broadcom | Playa Hotels vs. CENTURIA OFFICE REIT | Playa Hotels vs. TITANIUM TRANSPORTGROUP |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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