Correlation Between Playa Hotels and Baldwin Insurance
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Baldwin Insurance 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 Baldwin Insurance 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 The Baldwin Insurance, you can compare the effects of market volatilities on Playa Hotels and Baldwin Insurance 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 Baldwin Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Baldwin Insurance.
Diversification Opportunities for Playa Hotels and Baldwin Insurance
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Playa and Baldwin is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and The Baldwin Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baldwin Insurance 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 Baldwin Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baldwin Insurance has no effect on the direction of Playa Hotels i.e., Playa Hotels and Baldwin Insurance go up and down completely randomly.
Pair Corralation between Playa Hotels and Baldwin Insurance
Given the investment horizon of 90 days Playa Hotels is expected to generate 2.29 times less return on investment than Baldwin Insurance. But when comparing it to its historical volatility, Playa Hotels Resorts is 2.52 times less risky than Baldwin Insurance. It trades about 0.14 of its potential returns per unit of risk. The Baldwin Insurance is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,884 in The Baldwin Insurance on December 27, 2024 and sell it today you would earn a total of 721.00 from holding The Baldwin Insurance or generate 18.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Playa Hotels Resorts vs. The Baldwin Insurance
Performance |
Timeline |
Playa Hotels Resorts |
Baldwin Insurance |
Playa Hotels and Baldwin Insurance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Playa Hotels and Baldwin Insurance
The main advantage of trading using opposite Playa Hotels and Baldwin Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Baldwin Insurance 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 Baldwin Insurance will offset losses from the drop in Baldwin Insurance's long position.Playa Hotels vs. Golden Entertainment | Playa Hotels vs. Red Rock Resorts | Playa Hotels vs. Century Casinos | Playa Hotels vs. Studio City International |
Baldwin Insurance vs. Dream Office Real | Baldwin Insurance vs. Merit Medical Systems | Baldwin Insurance vs. Hudson Pacific Properties | Baldwin Insurance vs. Diageo PLC ADR |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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