Correlation Between Lindblad Expeditions and Playa Hotels

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

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

Diversification Opportunities for Lindblad Expeditions and Playa Hotels

0.75

Correlation Coefficient

Lindblad Expeditions  Playa Hotels

Poor diversification

The 3 months correlation between Lindblad and Playa is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lindblad Expeditions Holdings 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 Lindblad Expeditions 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 Lindblad Expeditions Holdings 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 Lindblad Expeditions i.e., Lindblad Expeditions and Playa Hotels go up and down completely randomly.

Pair Corralation between Lindblad Expeditions and Playa Hotels

Given the investment horizon of 90 days Lindblad Expeditions is expected to generate 1.47 times less return on investment than Playa Hotels. In addition to that, Lindblad Expeditions is 1.13 times more volatile than Playa Hotels Resorts. It trades about 0.12 of its total potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.2 per unit of volatility. If you would invest  775.00  in Playa Hotels Resorts on September 28, 2024 and sell it today you would earn a total of  450.00  from holding Playa Hotels Resorts or generate 58.06% return on investment over 90 days.

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

Lindblad Expeditions Holdings  vs.  Playa Hotels Resorts

Lindblad Expeditions

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lindblad Expeditions Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Lindblad Expeditions exhibited solid returns over the last few months and may actually be approaching a breakup point.

Playa Hotels Resorts

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playa Hotels Resorts are ranked lower than 15 (%) 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 Lindblad Expeditions and Playa Hotels

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

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .