Correlation Between Where Food and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Where Food 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 Where Food and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Where Food Comes and Playa Hotels Resorts, you can compare the effects of market volatilities on Where Food 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 Where Food with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Where Food and Playa Hotels.
Diversification Opportunities for Where Food and Playa Hotels
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Where and Playa is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Where Food Comes 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 Where Food 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 Where Food Comes 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 Where Food i.e., Where Food and Playa Hotels go up and down completely randomly.
Pair Corralation between Where Food and Playa Hotels
Given the investment horizon of 90 days Where Food is expected to generate 1.43 times less return on investment than Playa Hotels. But when comparing it to its historical volatility, Where Food Comes is 1.76 times less risky than Playa Hotels. It trades about 0.4 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 855.00 in Playa Hotels Resorts on September 2, 2024 and sell it today you would earn a total of 124.00 from holding Playa Hotels Resorts or generate 14.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Where Food Comes vs. Playa Hotels Resorts
Performance |
| Timeline |
| Where Food Comes |
| Playa Hotels Resorts |
Where Food and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Where Food and Playa Hotels
The main advantage of trading using opposite Where Food and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Where Food 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.| Where Food vs. Ke Holdings | Where Food vs. nCino Inc | Where Food vs. Kingsoft Cloud Holdings | Where Food vs. Jfrog |
| Playa Hotels vs. Mondee Holdings | Playa Hotels vs. MakeMyTrip Limited | Playa Hotels vs. Tuniu Corp | Playa Hotels vs. TripAdvisor |
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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