Correlation Between Aurora Investment and Wyndham Hotels

Can any of the company-specific risk be diversified away by investing in both Aurora Investment and Wyndham Hotels 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 Aurora Investment and Wyndham Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aurora Investment Trust and Wyndham Hotels Resorts, you can compare the effects of market volatilities on Aurora Investment and Wyndham Hotels 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 Aurora Investment with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Investment and Wyndham Hotels.

Diversification Opportunities for Aurora Investment and Wyndham Hotels

-0.84

Correlation Coefficient

Aurora Investment  Wyndham Hotels

Pay attention - limited upside

The 3 months correlation between Aurora and Wyndham is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Investment Trust and Wyndham Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wyndham Hotels Resorts and Aurora Investment 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 Aurora Investment Trust are associated (or correlated) with Wyndham Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wyndham Hotels Resorts has no effect on the direction of Aurora Investment i.e., Aurora Investment and Wyndham Hotels go up and down completely randomly.

Pair Corralation between Aurora Investment and Wyndham Hotels

Assuming the 90 days trading horizon Aurora Investment Trust is expected to under-perform the Wyndham Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Aurora Investment Trust is 1.05 times less risky than Wyndham Hotels. The stock trades about -0.11 of its potential returns per unit of risk. The Wyndham Hotels Resorts is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  9,706  in Wyndham Hotels Resorts on September 15, 2024 and sell it today you would earn a total of  637.00  from holding Wyndham Hotels Resorts or generate 6.56% return on investment over 90 days.

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

Aurora Investment Trust  vs.  Wyndham Hotels Resorts

Aurora Investment Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aurora Investment Trust 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.

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. In spite of comparatively uncertain basic indicators, Wyndham Hotels unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurora Investment and Wyndham Hotels

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

The idea behind Aurora Investment Trust and Wyndham Hotels Resorts 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.

Check out your portfolio center.

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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..