Correlation Between Wyndham Hotels and Givaudan

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

Diversification Opportunities for Wyndham Hotels and Givaudan

-0.67

Correlation Coefficient

Wyndham Hotels  Givaudan

Excellent diversification

The 3 months correlation between Wyndham and Givaudan is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA 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 Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Givaudan go up and down completely randomly.

Pair Corralation between Wyndham Hotels and Givaudan

Assuming the 90 days trading horizon Wyndham Hotels Resorts is expected to generate 1.26 times more return on investment than Givaudan. However, Wyndham Hotels is 1.26 times more volatile than Givaudan SA. It trades about 0.08 of its potential returns per unit of risk. Givaudan SA is currently generating about 0.07 per unit of risk. If you would invest  7,526  in Wyndham Hotels Resorts on October 8, 2024 and sell it today you would earn a total of  2,506  from holding Wyndham Hotels Resorts or generate 33.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.27%
Values	Daily Returns

Wyndham Hotels Resorts  vs.  Givaudan SA

Wyndham Hotels Resorts

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wyndham Hotels Resorts are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Wyndham Hotels unveiled solid returns over the last few months and may actually be approaching a breakup point.

Givaudan SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Givaudan SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Wyndham Hotels and Givaudan

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

The idea behind Wyndham Hotels Resorts and Givaudan SA 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.