Correlation Between Playa Hotels and NESTE OYJ
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and NESTE OYJ 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 NESTE OYJ 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 NESTE OYJ UNSPADR, you can compare the effects of market volatilities on Playa Hotels and NESTE OYJ 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 NESTE OYJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and NESTE OYJ.
Diversification Opportunities for Playa Hotels and NESTE OYJ
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Playa and NESTE is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and NESTE OYJ UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESTE OYJ UNSPADR 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 NESTE OYJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESTE OYJ UNSPADR has no effect on the direction of Playa Hotels i.e., Playa Hotels and NESTE OYJ go up and down completely randomly.
Pair Corralation between Playa Hotels and NESTE OYJ
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 0.34 times more return on investment than NESTE OYJ. However, Playa Hotels Resorts is 2.95 times less risky than NESTE OYJ. It trades about 0.07 of its potential returns per unit of risk. NESTE OYJ UNSPADR is currently generating about -0.12 per unit of risk. If you would invest 1,160 in Playa Hotels Resorts on December 28, 2024 and sell it today you would earn a total of 60.00 from holding Playa Hotels Resorts or generate 5.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Playa Hotels Resorts vs. NESTE OYJ UNSPADR
Performance |
Timeline |
Playa Hotels Resorts |
NESTE OYJ UNSPADR |
Playa Hotels and NESTE OYJ Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Playa Hotels and NESTE OYJ
The main advantage of trading using opposite Playa Hotels and NESTE OYJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, NESTE OYJ 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 NESTE OYJ will offset losses from the drop in NESTE OYJ's long position.Playa Hotels vs. Southwest Airlines Co | Playa Hotels vs. American Airlines Group | Playa Hotels vs. Comba Telecom Systems | Playa Hotels vs. Cairo Communication SpA |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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