Correlation Between SL Green and Wyndham

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

By analyzing existing cross correlation between SL Green Realty and Wyndham Destinations 4625, you can compare the effects of market volatilities on SL Green 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 SL Green with a short position of Wyndham. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and Wyndham.

Diversification Opportunities for SL Green and Wyndham

0.26

Correlation Coefficient

SL Green  Wyndham

Modest diversification

The 3 months correlation between SLG and Wyndham is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and Wyndham Destinations 4625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wyndham Destinations 4625 and SL Green 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 SL Green Realty 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 4625 has no effect on the direction of SL Green i.e., SL Green and Wyndham go up and down completely randomly.

Pair Corralation between SL Green and Wyndham

Considering the 90-day investment horizon SL Green Realty is expected to under-perform the Wyndham. In addition to that, SL Green is 5.57 times more volatile than Wyndham Destinations 4625. It trades about -0.1 of its total potential returns per unit of risk. Wyndham Destinations 4625 is currently generating about 0.02 per unit of volatility. If you would invest  9,342  in Wyndham Destinations 4625 on October 24, 2024 and sell it today you would earn a total of  36.00  from holding Wyndham Destinations 4625 or generate 0.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	83.33%
Values	Daily Returns

SL Green Realty  vs.  Wyndham Destinations 4625

SL Green Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SL Green Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Wyndham Destinations 4625

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wyndham Destinations 4625 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Wyndham is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SL Green and Wyndham

The main advantage of trading using opposite SL Green and Wyndham positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green 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 SL Green Realty and Wyndham Destinations 4625 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.