Correlation Between Wyndham Hotels and ICICI Bank

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

Diversification Opportunities for Wyndham Hotels and ICICI Bank

0.68

Correlation Coefficient

Wyndham Hotels  ICICI Bank

Poor diversification

The 3 months correlation between Wyndham and ICICI is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and ICICI Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICICI Bank Limited 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 ICICI Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICICI Bank Limited has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and ICICI Bank go up and down completely randomly.

Pair Corralation between Wyndham Hotels and ICICI Bank

Assuming the 90 days horizon Wyndham Hotels Resorts is expected to generate 1.29 times more return on investment than ICICI Bank. However, Wyndham Hotels is 1.29 times more volatile than ICICI Bank Limited. It trades about 0.25 of its potential returns per unit of risk. ICICI Bank Limited is currently generating about 0.06 per unit of risk. If you would invest  7,172  in Wyndham Hotels Resorts on October 10, 2024 and sell it today you would earn a total of  2,528  from holding Wyndham Hotels Resorts or generate 35.25% return on investment over 90 days.

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

Wyndham Hotels Resorts  vs.  ICICI Bank Limited

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

ICICI Bank Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICICI Bank Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, ICICI Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Wyndham Hotels and ICICI Bank

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

The idea behind Wyndham Hotels Resorts and ICICI Bank Limited 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.