Correlation Between 037833EC0 and Playa Hotels

Can any of the company-specific risk be diversified away by investing in both 037833EC0 and Playa Hotels 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 037833EC0 and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AAPL 12 08 FEB 28 and Playa Hotels Resorts, you can compare the effects of market volatilities on 037833EC0 and Playa Hotels 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 037833EC0 with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of 037833EC0 and Playa Hotels.

Diversification Opportunities for 037833EC0 and Playa Hotels

-0.72

Correlation Coefficient

037833EC0  Playa Hotels

Pay attention - limited upside

The 3 months correlation between 037833EC0 and Playa is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding AAPL 12 08 FEB 28 and Playa Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playa Hotels Resorts and 037833EC0 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 AAPL 12 08 FEB 28 are associated (or correlated) with Playa Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playa Hotels Resorts has no effect on the direction of 037833EC0 i.e., 037833EC0 and Playa Hotels go up and down completely randomly.

Pair Corralation between 037833EC0 and Playa Hotels

Assuming the 90 days trading horizon AAPL 12 08 FEB 28 is expected to under-perform the Playa Hotels. But the bond apears to be less risky and, when comparing its historical volatility, AAPL 12 08 FEB 28 is 9.72 times less risky than Playa Hotels. The bond trades about -0.05 of its potential returns per unit of risk. The Playa Hotels Resorts is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  764.00  in Playa Hotels Resorts on September 12, 2024 and sell it today you would earn a total of  238.00  from holding Playa Hotels Resorts or generate 31.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

AAPL 12 08 FEB 28  vs.  Playa Hotels Resorts

AAPL 12 08

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AAPL 12 08 FEB 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 037833EC0 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Playa Hotels Resorts

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Playa Hotels Resorts are ranked lower than 19 (%) 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.

Pair Trading with 037833EC0 and Playa Hotels

The main advantage of trading using opposite 037833EC0 and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 037833EC0 position performs unexpectedly, Playa Hotels 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 Playa Hotels will offset losses from the drop in Playa Hotels' long position.

The idea behind AAPL 12 08 FEB 28 and Playa Hotels Resorts 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.