Correlation Between Playa Hotels and 456837AV5

Can any of the company-specific risk be diversified away by investing in both Playa Hotels and 456837AV5 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 456837AV5 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 ING GROEP NV, you can compare the effects of market volatilities on Playa Hotels and 456837AV5 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 456837AV5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and 456837AV5.

Diversification Opportunities for Playa Hotels and 456837AV5

-0.34

Correlation Coefficient

Playa Hotels  456837AV5

Very good diversification

The 3 months correlation between Playa and 456837AV5 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and ING GROEP NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING GROEP NV 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 456837AV5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING GROEP NV has no effect on the direction of Playa Hotels i.e., Playa Hotels and 456837AV5 go up and down completely randomly.

Pair Corralation between Playa Hotels and 456837AV5

Given the investment horizon of 90 days Playa Hotels Resorts is expected to generate 93.92 times more return on investment than 456837AV5. However, Playa Hotels is 93.92 times more volatile than ING GROEP NV. It trades about 0.19 of its potential returns per unit of risk. ING GROEP NV is currently generating about 0.22 per unit of risk. If you would invest  990.00  in Playa Hotels Resorts on September 24, 2024 and sell it today you would earn a total of  245.00  from holding Playa Hotels Resorts or generate 24.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.95%
Values	Daily Returns

Playa Hotels Resorts  vs.  ING GROEP NV

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.

ING GROEP NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ING GROEP NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ING GROEP NV investors.

Pair Trading with Playa Hotels and 456837AV5

The main advantage of trading using opposite Playa Hotels and 456837AV5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, 456837AV5 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 456837AV5 will offset losses from the drop in 456837AV5's long position.

The idea behind Playa Hotels Resorts and ING GROEP NV 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..