Correlation Between Playa Hotels and Sonos
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Sonos 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 Sonos 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 Sonos Inc, you can compare the effects of market volatilities on Playa Hotels and Sonos 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 Sonos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Sonos.
Diversification Opportunities for Playa Hotels and Sonos
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Playa and Sonos is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos 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 Sonos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonos Inc has no effect on the direction of Playa Hotels i.e., Playa Hotels and Sonos go up and down completely randomly.
Pair Corralation between Playa Hotels and Sonos
Given the investment horizon of 90 days Playa Hotels Resorts is expected to generate 0.76 times more return on investment than Sonos. However, Playa Hotels Resorts is 1.32 times less risky than Sonos. It trades about 0.05 of its potential returns per unit of risk. Sonos Inc is currently generating about -0.01 per unit of risk. If you would invest 865.00 in Playa Hotels Resorts on December 2, 2024 and sell it today you would earn a total of 470.00 from holding Playa Hotels Resorts or generate 54.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Playa Hotels Resorts vs. Sonos Inc
Performance |
Timeline |
Playa Hotels Resorts |
Sonos Inc |
Playa Hotels and Sonos Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Playa Hotels and Sonos
The main advantage of trading using opposite Playa Hotels and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Sonos 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 Sonos will offset losses from the drop in Sonos' long position.Playa Hotels vs. Golden Entertainment | Playa Hotels vs. Red Rock Resorts | Playa Hotels vs. Century Casinos | Playa Hotels vs. Studio City International |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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