Correlation Between Zurich Insurance and Wyndham Hotels

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

By analyzing existing cross correlation between Zurich Insurance Group and Wyndham Hotels Resorts, you can compare the effects of market volatilities on Zurich Insurance and Wyndham 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 Zurich Insurance with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurich Insurance and Wyndham Hotels.

Diversification Opportunities for Zurich Insurance and Wyndham Hotels

0.15

Correlation Coefficient

Zurich Insurance  Wyndham Hotels

Average diversification

The 3 months correlation between Zurich and Wyndham is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Zurich Insurance Group and Wyndham Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wyndham Hotels Resorts and Zurich Insurance 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 Zurich Insurance Group are associated (or correlated) with Wyndham Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wyndham Hotels Resorts has no effect on the direction of Zurich Insurance i.e., Zurich Insurance and Wyndham Hotels go up and down completely randomly.

Pair Corralation between Zurich Insurance and Wyndham Hotels

Assuming the 90 days trading horizon Zurich Insurance Group is expected to under-perform the Wyndham Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Zurich Insurance Group is 2.24 times less risky than Wyndham Hotels. The stock trades about -0.03 of its potential returns per unit of risk. The Wyndham Hotels Resorts is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  8,481  in Wyndham Hotels Resorts on April 25, 2025 and sell it today you would earn a total of  214.00  from holding Wyndham Hotels Resorts or generate 2.52% return on investment over 90 days.

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

Zurich Insurance Group  vs.  Wyndham Hotels Resorts

Zurich Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zurich Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Zurich Insurance is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Wyndham Hotels Resorts

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wyndham Hotels Resorts are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Wyndham Hotels is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Zurich Insurance and Wyndham Hotels

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

The idea behind Zurich Insurance Group and Wyndham 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.