Correlation Between Playtika Holding and Dream Finders

Can any of the company-specific risk be diversified away by investing in both Playtika Holding and Dream Finders 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 Playtika Holding and Dream Finders into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Playtika Holding Corp and Dream Finders Homes, you can compare the effects of market volatilities on Playtika Holding and Dream Finders 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 Playtika Holding with a short position of Dream Finders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtika Holding and Dream Finders.

Diversification Opportunities for Playtika Holding and Dream Finders

0.35

Correlation Coefficient

Playtika Holding  Dream Finders

Weak diversification

The 3 months correlation between Playtika and Dream is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and Dream Finders Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Finders Homes and Playtika Holding 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 Playtika Holding Corp are associated (or correlated) with Dream Finders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Finders Homes has no effect on the direction of Playtika Holding i.e., Playtika Holding and Dream Finders go up and down completely randomly.

Pair Corralation between Playtika Holding and Dream Finders

Given the investment horizon of 90 days Playtika Holding Corp is expected to generate 0.57 times more return on investment than Dream Finders. However, Playtika Holding Corp is 1.75 times less risky than Dream Finders. It trades about -0.13 of its potential returns per unit of risk. Dream Finders Homes is currently generating about -0.21 per unit of risk. If you would invest  792.00  in Playtika Holding Corp on September 29, 2024 and sell it today you would lose (115.00) from holding Playtika Holding Corp or give up 14.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Playtika Holding Corp  vs.  Dream Finders Homes

Playtika Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Playtika Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Dream Finders Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dream Finders Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Playtika Holding and Dream Finders

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

The idea behind Playtika Holding Corp and Dream Finders Homes 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.