Correlation Between Playa Hotels and AM EAGLE

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

Diversification Opportunities for Playa Hotels and AM EAGLE

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between Playa and AFG is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and AM EAGLE OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AM EAGLE OUTFITTERS 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 AM EAGLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AM EAGLE OUTFITTERS has no effect on the direction of Playa Hotels i.e., Playa Hotels and AM EAGLE go up and down completely randomly.

Pair Corralation between Playa Hotels and AM EAGLE

Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 0.7 times more return on investment than AM EAGLE. However, Playa Hotels Resorts is 1.42 times less risky than AM EAGLE. It trades about 0.06 of its potential returns per unit of risk. AM EAGLE OUTFITTERS is currently generating about 0.03 per unit of risk. If you would invest  565.00  in Playa Hotels Resorts on September 12, 2024 and sell it today you would earn a total of  370.00  from holding Playa Hotels Resorts or generate 65.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Playa Hotels Resorts  vs.  AM EAGLE OUTFITTERS

 Performance 
       Timeline  
Playa Hotels Resorts 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Playa Hotels Resorts are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Playa Hotels reported solid returns over the last few months and may actually be approaching a breakup point.
AM EAGLE OUTFITTERS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AM EAGLE OUTFITTERS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, AM EAGLE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Playa Hotels and AM EAGLE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Playa Hotels and AM EAGLE

The main advantage of trading using opposite Playa Hotels and AM EAGLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, AM EAGLE 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 AM EAGLE will offset losses from the drop in AM EAGLE's long position.
The idea behind Playa Hotels Resorts and AM EAGLE OUTFITTERS 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 Stocks Directory module to find actively traded stocks across global markets.

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