Correlation Between Wyndham Hotels and OptiNose

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

Diversification Opportunities for Wyndham Hotels and OptiNose

-0.59

Correlation Coefficient

Wyndham Hotels  OptiNose

Excellent diversification

The 3 months correlation between Wyndham and OptiNose is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and OptiNose in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OptiNose 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 OptiNose. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OptiNose has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and OptiNose go up and down completely randomly.

Pair Corralation between Wyndham Hotels and OptiNose

Assuming the 90 days horizon Wyndham Hotels Resorts is expected to generate 0.07 times more return on investment than OptiNose. However, Wyndham Hotels Resorts is 13.55 times less risky than OptiNose. It trades about 0.06 of its potential returns per unit of risk. OptiNose is currently generating about -0.28 per unit of risk. If you would invest  9,513  in Wyndham Hotels Resorts on October 6, 2024 and sell it today you would earn a total of  137.00  from holding Wyndham Hotels Resorts or generate 1.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.12%
Values	Daily Returns

Wyndham Hotels Resorts  vs.  OptiNose

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. Despite nearly fragile basic indicators, Wyndham Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

OptiNose

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days OptiNose has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, OptiNose reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wyndham Hotels and OptiNose

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

The idea behind Wyndham Hotels Resorts and OptiNose 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.