Correlation Between Playa Hotels and Granite Construction
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Granite Construction 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 Granite Construction 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 Granite Construction, you can compare the effects of market volatilities on Playa Hotels and Granite Construction 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 Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Granite Construction.
Diversification Opportunities for Playa Hotels and Granite Construction
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Playa and Granite is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction 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 Granite Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Construction has no effect on the direction of Playa Hotels i.e., Playa Hotels and Granite Construction go up and down completely randomly.
Pair Corralation between Playa Hotels and Granite Construction
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 1.42 times more return on investment than Granite Construction. However, Playa Hotels is 1.42 times more volatile than Granite Construction. It trades about 0.02 of its potential returns per unit of risk. Granite Construction is currently generating about -0.34 per unit of risk. If you would invest 915.00 in Playa Hotels Resorts on September 24, 2024 and sell it today you would earn a total of 5.00 from holding Playa Hotels Resorts or generate 0.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Playa Hotels Resorts vs. Granite Construction
Performance |
Timeline |
Playa Hotels Resorts |
Granite Construction |
Playa Hotels and Granite Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Playa Hotels and Granite Construction
The main advantage of trading using opposite Playa Hotels and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Granite Construction 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 Granite Construction will offset losses from the drop in Granite Construction's long position.Playa Hotels vs. GRIFFIN MINING LTD | Playa Hotels vs. Data3 Limited | Playa Hotels vs. INFORMATION SVC GRP | Playa Hotels vs. LION ONE METALS |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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