Correlation Between Playa Hotels and PENSKE

Can any of the company-specific risk be diversified away by investing in both Playa Hotels and PENSKE 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 PENSKE 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 PENSKE 57 01 FEB 28, you can compare the effects of market volatilities on Playa Hotels and PENSKE 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 PENSKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and PENSKE.

Diversification Opportunities for Playa Hotels and PENSKE

-0.51

Correlation Coefficient

Playa Hotels  PENSKE

Excellent diversification

The 3 months correlation between Playa and PENSKE is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and PENSKE 57 01 FEB 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENSKE 57 01 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 PENSKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENSKE 57 01 has no effect on the direction of Playa Hotels i.e., Playa Hotels and PENSKE go up and down completely randomly.

Pair Corralation between Playa Hotels and PENSKE

Given the investment horizon of 90 days Playa Hotels Resorts is expected to generate 3.02 times more return on investment than PENSKE. However, Playa Hotels is 3.02 times more volatile than PENSKE 57 01 FEB 28. It trades about 0.2 of its potential returns per unit of risk. PENSKE 57 01 FEB 28 is currently generating about -0.24 per unit of risk. If you would invest  776.00  in Playa Hotels Resorts on September 25, 2024 and sell it today you would earn a total of  185.00  from holding Playa Hotels Resorts or generate 23.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	66.67%
Values	Daily Returns

Playa Hotels Resorts  vs.  PENSKE 57 01 FEB 28

Playa Hotels Resorts

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playa Hotels Resorts are ranked lower than 15 (%) 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.

PENSKE 57 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PENSKE 57 01 FEB 28 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 PENSKE 57 01 FEB 28 investors.

Pair Trading with Playa Hotels and PENSKE

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

The idea behind Playa Hotels Resorts and PENSKE 57 01 FEB 28 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.