Correlation Between Wyndham Hotels and URU Metals

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

Diversification Opportunities for Wyndham Hotels and URU Metals

0.32

Correlation Coefficient

Wyndham Hotels  URU Metals

Weak diversification

The 3 months correlation between Wyndham and URU is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and URU Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URU Metals 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 URU Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URU Metals has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and URU Metals go up and down completely randomly.

Pair Corralation between Wyndham Hotels and URU Metals

Assuming the 90 days trading horizon Wyndham Hotels Resorts is expected to generate 0.54 times more return on investment than URU Metals. However, Wyndham Hotels Resorts is 1.86 times less risky than URU Metals. It trades about -0.11 of its potential returns per unit of risk. URU Metals is currently generating about -0.07 per unit of risk. If you would invest  10,414  in Wyndham Hotels Resorts on December 11, 2024 and sell it today you would lose (1,035) from holding Wyndham Hotels Resorts or give up 9.94% of portfolio value over 90 days.

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

Wyndham Hotels Resorts  vs.  URU Metals

Wyndham Hotels Resorts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wyndham Hotels Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

URU Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days URU Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Wyndham Hotels and URU Metals

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

The idea behind Wyndham Hotels Resorts and URU Metals 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.