Correlation Between Playa Hotels and United Homes
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and United Homes 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 United Homes 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 United Homes Group, you can compare the effects of market volatilities on Playa Hotels and United Homes 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 United Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and United Homes.
Diversification Opportunities for Playa Hotels and United Homes
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Playa and United is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and United Homes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Homes Group 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 United Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Homes Group has no effect on the direction of Playa Hotels i.e., Playa Hotels and United Homes go up and down completely randomly.
Pair Corralation between Playa Hotels and United Homes
Given the investment horizon of 90 days Playa Hotels Resorts is expected to generate 0.31 times more return on investment than United Homes. However, Playa Hotels Resorts is 3.26 times less risky than United Homes. It trades about 0.05 of its potential returns per unit of risk. United Homes Group is currently generating about 0.0 per unit of risk. If you would invest 864.00 in Playa Hotels Resorts on December 4, 2024 and sell it today you would earn a total of 470.50 from holding Playa Hotels Resorts or generate 54.46% 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. United Homes Group
Performance |
Timeline |
Playa Hotels Resorts |
United Homes Group |
Playa Hotels and United Homes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Playa Hotels and United Homes
The main advantage of trading using opposite Playa Hotels and United Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, United Homes 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 United Homes will offset losses from the drop in United Homes' long position.Playa Hotels vs. Golden Entertainment | Playa Hotels vs. Red Rock Resorts | Playa Hotels vs. Century Casinos | Playa Hotels vs. Studio City International |
United Homes vs. Tapestry | United Homes vs. Boot Barn Holdings | United Homes vs. Jeld Wen Holding | United Homes vs. ioneer Ltd American |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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