Correlation Between WW International and Wyndham Hotels
Can any of the company-specific risk be diversified away by investing in both WW International 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 WW International and Wyndham Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WW International and Wyndham Hotels Resorts, you can compare the effects of market volatilities on WW International 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 WW International with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of WW International and Wyndham Hotels.
Diversification Opportunities for WW International and Wyndham Hotels
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WW International and Wyndham is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding WW International 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 WW International 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 WW International 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 WW International i.e., WW International and Wyndham Hotels go up and down completely randomly.
Pair Corralation between WW International and Wyndham Hotels
Allowing for the 90-day total investment horizon WW International is expected to generate 3.94 times more return on investment than Wyndham Hotels. However, WW International is 3.94 times more volatile than Wyndham Hotels Resorts. It trades about 0.02 of its potential returns per unit of risk. Wyndham Hotels Resorts is currently generating about -0.06 per unit of risk. If you would invest 177.00 in WW International on January 30, 2024 and sell it today you would lose (2.00) from holding WW International or give up 1.13% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
WW International vs. Wyndham Hotels Resorts
Performance |
Timeline |
WW International |
Wyndham Hotels Resorts |
WW International and Wyndham Hotels Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with WW International and Wyndham Hotels
The main advantage of trading using opposite WW International and Wyndham Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WW International 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 WW International 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.Wyndham Hotels vs. InterContinental Hotels Group | Wyndham Hotels vs. Hyatt Hotels | Wyndham Hotels vs. Hilton Worldwide Holdings | Wyndham Hotels vs. Marriott International |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |