Correlation Between Wyndham Hotels and Swiss Re

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

Diversification Opportunities for Wyndham Hotels and Swiss Re

-0.23

Correlation Coefficient

Wyndham Hotels  Swiss Re

Very good diversification

The 3 months correlation between Wyndham and Swiss is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Swiss Re AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Re AG 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 Swiss Re. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Re AG has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Swiss Re go up and down completely randomly.

Pair Corralation between Wyndham Hotels and Swiss Re

Assuming the 90 days horizon Wyndham Hotels Resorts is expected to under-perform the Swiss Re. But the stock apears to be less risky and, when comparing its historical volatility, Wyndham Hotels Resorts is 1.28 times less risky than Swiss Re. The stock trades about -0.14 of its potential returns per unit of risk. The Swiss Re AG is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,460  in Swiss Re AG on December 24, 2024 and sell it today you would earn a total of  400.00  from holding Swiss Re AG or generate 11.56% return on investment over 90 days.

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

Wyndham Hotels Resorts  vs.  Swiss Re AG

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Swiss Re AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Re AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Swiss Re reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wyndham Hotels and Swiss Re

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

The idea behind Wyndham Hotels Resorts and Swiss Re AG 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.