Correlation Between Chart Industries and Wyndham

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

By analyzing existing cross correlation between Chart Industries and Wyndham Destinations 51, you can compare the effects of market volatilities on Chart Industries and Wyndham 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 Chart Industries with a short position of Wyndham. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chart Industries and Wyndham.

Diversification Opportunities for Chart Industries and Wyndham

-0.47

Correlation Coefficient

Chart Industries  Wyndham

Very good diversification

The 3 months correlation between Chart and Wyndham is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Chart Industries and Wyndham Destinations 51 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wyndham Destinations and Chart Industries 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 Chart Industries are associated (or correlated) with Wyndham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wyndham Destinations has no effect on the direction of Chart Industries i.e., Chart Industries and Wyndham go up and down completely randomly.

Pair Corralation between Chart Industries and Wyndham

Given the investment horizon of 90 days Chart Industries is expected to generate 14.66 times more return on investment than Wyndham. However, Chart Industries is 14.66 times more volatile than Wyndham Destinations 51. It trades about 0.3 of its potential returns per unit of risk. Wyndham Destinations 51 is currently generating about -0.03 per unit of risk. If you would invest  12,636  in Chart Industries on October 9, 2024 and sell it today you would earn a total of  7,976  from holding Chart Industries or generate 63.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.44%
Values	Daily Returns

Chart Industries  vs.  Wyndham Destinations 51

Chart Industries

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chart Industries are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Chart Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Wyndham Destinations

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wyndham Destinations 51 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Wyndham is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chart Industries and Wyndham

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

The idea behind Chart Industries and Wyndham Destinations 51 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.