Correlation Between H World and Wyndham Hotels
Can any of the company-specific risk be diversified away by investing in both H World 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 H World and Wyndham Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H World Group and Wyndham Hotels Resorts, you can compare the effects of market volatilities on H World 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 H World with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of H World and Wyndham Hotels.
Diversification Opportunities for H World and Wyndham Hotels
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CL4A and Wyndham is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding H World Group 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 H World 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 H World Group 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 H World i.e., H World and Wyndham Hotels go up and down completely randomly.
Pair Corralation between H World and Wyndham Hotels
Assuming the 90 days trading horizon H World is expected to generate 3.96 times less return on investment than Wyndham Hotels. In addition to that, H World is 1.54 times more volatile than Wyndham Hotels Resorts. It trades about 0.02 of its total potential returns per unit of risk. Wyndham Hotels Resorts is currently generating about 0.15 per unit of volatility. If you would invest 6,687 in Wyndham Hotels Resorts on September 25, 2024 and sell it today you would earn a total of 2,863 from holding Wyndham Hotels Resorts or generate 42.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
H World Group vs. Wyndham Hotels Resorts
Performance |
Timeline |
H World Group |
Wyndham Hotels Resorts |
H World and Wyndham Hotels Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with H World and Wyndham Hotels
The main advantage of trading using opposite H World and Wyndham Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H World 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.H World vs. Marriott International | H World vs. Hilton Worldwide Holdings | H World vs. Hyatt Hotels | H World vs. InterContinental Hotels Group |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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