Correlation Between Funko and Playa Hotels

Can any of the company-specific risk be diversified away by investing in both Funko 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 Funko and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Funko Inc and Playa Hotels Resorts, you can compare the effects of market volatilities on Funko 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 Funko with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Funko and Playa Hotels.

Diversification Opportunities for Funko and Playa Hotels

0.9

Correlation Coefficient

Funko  Playa Hotels

Almost no diversification

The 3 months correlation between Funko and Playa is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc 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 Funko 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 Funko Inc 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 Funko i.e., Funko and Playa Hotels go up and down completely randomly.

Pair Corralation between Funko and Playa Hotels

Given the investment horizon of 90 days Funko is expected to generate 3.24 times less return on investment than Playa Hotels. But when comparing it to its historical volatility, Funko Inc is 1.64 times less risky than Playa Hotels. It trades about 0.08 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  979.00  in Playa Hotels Resorts on November 29, 2024 and sell it today you would earn a total of  355.00  from holding Playa Hotels Resorts or generate 36.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Funko Inc  vs.  Playa Hotels Resorts

Funko Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Funko Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward-looking signals, Funko may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Playa Hotels Resorts

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playa Hotels Resorts are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Playa Hotels sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Funko and Playa Hotels

The main advantage of trading using opposite Funko and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Funko 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.

The idea behind Funko Inc and Playa Hotels Resorts pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.