Correlation Between Playa Hotels and G-III Apparel
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and G-III Apparel 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 Playa Hotels and G-III Apparel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playa Hotels Resorts and G III Apparel Group, you can compare the effects of market volatilities on Playa Hotels and G-III Apparel 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 Playa Hotels with a short position of G-III Apparel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and G-III Apparel.
Diversification Opportunities for Playa Hotels and G-III Apparel
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Playa and G-III is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and G III Apparel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III Apparel and Playa Hotels 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 Playa Hotels Resorts are associated (or correlated) with G-III Apparel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III Apparel has no effect on the direction of Playa Hotels i.e., Playa Hotels and G-III Apparel go up and down completely randomly.
Pair Corralation between Playa Hotels and G-III Apparel
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 0.85 times more return on investment than G-III Apparel. However, Playa Hotels Resorts is 1.18 times less risky than G-III Apparel. It trades about 0.09 of its potential returns per unit of risk. G III Apparel Group is currently generating about 0.02 per unit of risk. If you would invest 740.00 in Playa Hotels Resorts on October 9, 2024 and sell it today you would earn a total of 460.00 from holding Playa Hotels Resorts or generate 62.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Playa Hotels Resorts vs. G III Apparel Group
Performance |
Timeline |
Playa Hotels Resorts |
G III Apparel |
Playa Hotels and G-III Apparel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Playa Hotels and G-III Apparel
The main advantage of trading using opposite Playa Hotels and G-III Apparel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, G-III Apparel 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 G-III Apparel will offset losses from the drop in G-III Apparel's long position.Playa Hotels vs. RYU Apparel | Playa Hotels vs. Performance Food Group | Playa Hotels vs. GWILLI FOOD | Playa Hotels vs. Astral Foods Limited |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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