Correlation Between Wyndham Hotels and State Bank

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

Diversification Opportunities for Wyndham Hotels and State Bank

-0.69

Correlation Coefficient

Wyndham Hotels  State Bank

Excellent diversification

The 3 months correlation between Wyndham and State is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank 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 State Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Bank has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and State Bank go up and down completely randomly.

Pair Corralation between Wyndham Hotels and State Bank

Assuming the 90 days trading horizon Wyndham Hotels Resorts is expected to generate 0.97 times more return on investment than State Bank. However, Wyndham Hotels Resorts is 1.03 times less risky than State Bank. It trades about 0.14 of its potential returns per unit of risk. State Bank of is currently generating about -0.3 per unit of risk. If you would invest  9,770  in Wyndham Hotels Resorts on December 1, 2024 and sell it today you would earn a total of  1,003  from holding Wyndham Hotels Resorts or generate 10.27% return on investment over 90 days.

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

Wyndham Hotels Resorts  vs.  State Bank of

Wyndham Hotels Resorts

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wyndham Hotels Resorts are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Wyndham Hotels may actually be approaching a critical reversion point that can send shares even higher in April 2025.

State Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days State Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Wyndham Hotels and State Bank

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

The idea behind Wyndham Hotels Resorts and State Bank of 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.