Correlation Between Playa Hotels and MCEWEN MINING

Can any of the company-specific risk be diversified away by investing in both Playa Hotels and MCEWEN MINING 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 MCEWEN MINING 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 MCEWEN MINING INC, you can compare the effects of market volatilities on Playa Hotels and MCEWEN MINING 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 MCEWEN MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and MCEWEN MINING.

Diversification Opportunities for Playa Hotels and MCEWEN MINING

-0.49

Correlation Coefficient

Playa Hotels  MCEWEN MINING

Very good diversification

The 3 months correlation between Playa and MCEWEN is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and MCEWEN MINING INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCEWEN MINING INC 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 MCEWEN MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCEWEN MINING INC has no effect on the direction of Playa Hotels i.e., Playa Hotels and MCEWEN MINING go up and down completely randomly.

Pair Corralation between Playa Hotels and MCEWEN MINING

Assuming the 90 days horizon Playa Hotels is expected to generate 1.24 times less return on investment than MCEWEN MINING. But when comparing it to its historical volatility, Playa Hotels Resorts is 1.96 times less risky than MCEWEN MINING. It trades about 0.06 of its potential returns per unit of risk. MCEWEN MINING INC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  550.00  in MCEWEN MINING INC on September 24, 2024 and sell it today you would earn a total of  215.00  from holding MCEWEN MINING INC or generate 39.09% return on investment over 90 days.

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

Playa Hotels Resorts  vs.  MCEWEN MINING INC

Playa Hotels Resorts

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playa Hotels Resorts are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Playa Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

MCEWEN MINING INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MCEWEN MINING INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Playa Hotels and MCEWEN MINING

The main advantage of trading using opposite Playa Hotels and MCEWEN MINING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, MCEWEN MINING 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 MCEWEN MINING will offset losses from the drop in MCEWEN MINING's long position.

The idea behind Playa Hotels Resorts and MCEWEN MINING INC 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.