Correlation Between Wyndham Hotels and Intergroup

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

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

Diversification Opportunities for Wyndham Hotels and Intergroup

0.17

Correlation Coefficient

Wyndham Hotels  Intergroup

Average diversification

The 3 months correlation between Wyndham and Intergroup is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and The Intergroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intergroup and Wyndham 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 Wyndham Hotels Resorts are associated (or correlated) with Intergroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intergroup has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Intergroup go up and down completely randomly.

Pair Corralation between Wyndham Hotels and Intergroup

Allowing for the 90-day total investment horizon Wyndham Hotels Resorts is expected to generate 0.37 times more return on investment than Intergroup. However, Wyndham Hotels Resorts is 2.67 times less risky than Intergroup. It trades about 0.03 of its potential returns per unit of risk. The Intergroup is currently generating about 0.0 per unit of risk. If you would invest  7,275  in Wyndham Hotels Resorts on February 4, 2024 and sell it today you would earn a total of  50.00  from holding Wyndham Hotels Resorts or generate 0.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Wyndham Hotels Resorts  vs.  The Intergroup

Wyndham Hotels Resorts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wyndham Hotels Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Wyndham Hotels is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Intergroup

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Intergroup are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Intergroup is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Wyndham Hotels and Intergroup

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

The idea behind Wyndham Hotels Resorts and The Intergroup 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.