Correlation Between LuxUrban Hotels and Wyndham Hotels
Can any of the company-specific risk be diversified away by investing in both LuxUrban Hotels 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 LuxUrban Hotels and Wyndham Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LuxUrban Hotels and Wyndham Hotels Resorts, you can compare the effects of market volatilities on LuxUrban Hotels 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 LuxUrban Hotels with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of LuxUrban Hotels and Wyndham Hotels.
Diversification Opportunities for LuxUrban Hotels and Wyndham Hotels
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LuxUrban and Wyndham is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding LuxUrban Hotels 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 LuxUrban 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 LuxUrban Hotels 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 LuxUrban Hotels i.e., LuxUrban Hotels and Wyndham Hotels go up and down completely randomly.
Pair Corralation between LuxUrban Hotels and Wyndham Hotels
Given the investment horizon of 90 days LuxUrban Hotels is expected to under-perform the Wyndham Hotels. In addition to that, LuxUrban Hotels is 6.7 times more volatile than Wyndham Hotels Resorts. It trades about -0.23 of its total potential returns per unit of risk. Wyndham Hotels Resorts is currently generating about -0.03 per unit of volatility. If you would invest 7,471 in Wyndham Hotels Resorts on February 4, 2024 and sell it today you would lose (146.00) from holding Wyndham Hotels Resorts or give up 1.95% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 97.78% |
Values | Daily Returns |
LuxUrban Hotels vs. Wyndham Hotels Resorts
Performance |
Timeline |
LuxUrban Hotels |
Wyndham Hotels Resorts |
LuxUrban Hotels and Wyndham Hotels Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LuxUrban Hotels and Wyndham Hotels
The main advantage of trading using opposite LuxUrban Hotels and Wyndham Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LuxUrban Hotels 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.LuxUrban Hotels vs. GreenTree Hospitality Group | LuxUrban Hotels vs. InterContinental Hotels Group | LuxUrban Hotels vs. Atour Lifestyle Holdings | LuxUrban Hotels vs. Huazhu Group |
Wyndham Hotels vs. Yatra Online | Wyndham Hotels vs. Despegar Corp | Wyndham Hotels vs. Mondee Holdings | Wyndham Hotels vs. MakeMyTrip Limited |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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