Correlation Between Playa Hotels and Agnico Eagle

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

Diversification Opportunities for Playa Hotels and Agnico Eagle

0.1

Correlation Coefficient

Playa Hotels  Agnico Eagle

Average diversification

The 3 months correlation between Playa and Agnico is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Agnico Eagle Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agnico Eagle Mines 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 Agnico Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agnico Eagle Mines has no effect on the direction of Playa Hotels i.e., Playa Hotels and Agnico Eagle go up and down completely randomly.

Pair Corralation between Playa Hotels and Agnico Eagle

Given the investment horizon of 90 days Playa Hotels Resorts is expected to generate 0.76 times more return on investment than Agnico Eagle. However, Playa Hotels Resorts is 1.32 times less risky than Agnico Eagle. It trades about -0.03 of its potential returns per unit of risk. Agnico Eagle Mines is currently generating about -0.15 per unit of risk. If you would invest  972.00  in Playa Hotels Resorts on September 23, 2024 and sell it today you would lose (11.00) from holding Playa Hotels Resorts or give up 1.13% of portfolio value over 90 days.

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

Playa Hotels Resorts  vs.  Agnico Eagle Mines

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 somewhat unfluctuating basic indicators, Playa Hotels sustained solid returns over the last few months and may actually be approaching a breakup point.

Agnico Eagle Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agnico Eagle Mines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Agnico Eagle is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Playa Hotels and Agnico Eagle

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

The idea behind Playa Hotels Resorts and Agnico Eagle Mines 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.