Correlation Between Wyndham Hotels and Apple

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

Diversification Opportunities for Wyndham Hotels and Apple

0.71

Correlation Coefficient

Wyndham Hotels  Apple

Poor diversification

The 3 months correlation between Wyndham and Apple is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Apple go up and down completely randomly.

Pair Corralation between Wyndham Hotels and Apple

Assuming the 90 days horizon Wyndham Hotels Resorts is expected to generate 0.46 times more return on investment than Apple. However, Wyndham Hotels Resorts is 2.18 times less risky than Apple. It trades about 0.31 of its potential returns per unit of risk. Apple Inc is currently generating about -0.44 per unit of risk. If you would invest  9,700  in Wyndham Hotels Resorts on October 25, 2024 and sell it today you would earn a total of  400.00  from holding Wyndham Hotels Resorts or generate 4.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

Wyndham Hotels Resorts  vs.  Apple Inc

Wyndham Hotels Resorts

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wyndham Hotels Resorts are ranked lower than 16 (%) 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.

Apple Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Apple is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wyndham Hotels and Apple

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

The idea behind Wyndham Hotels Resorts and Apple Inc 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.