Correlation Between SUN ART and Wyndham Hotels

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

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

Diversification Opportunities for SUN ART and Wyndham Hotels

0.89

Correlation Coefficient

SUN ART  Wyndham Hotels

Very poor diversification

The 3 months correlation between SUN and Wyndham is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding SUN ART RETAIL 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 SUN ART 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 SUN ART RETAIL 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 SUN ART i.e., SUN ART and Wyndham Hotels go up and down completely randomly.

Pair Corralation between SUN ART and Wyndham Hotels

Assuming the 90 days trading horizon SUN ART RETAIL is expected to generate 2.08 times more return on investment than Wyndham Hotels. However, SUN ART is 2.08 times more volatile than Wyndham Hotels Resorts. It trades about 0.24 of its potential returns per unit of risk. Wyndham Hotels Resorts is currently generating about 0.15 per unit of risk. If you would invest  26.00  in SUN ART RETAIL on September 22, 2024 and sell it today you would earn a total of  5.00  from holding SUN ART RETAIL or generate 19.23% return on investment over 90 days.

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

SUN ART RETAIL  vs.  Wyndham Hotels Resorts

SUN ART RETAIL

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SUN ART RETAIL are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, SUN ART exhibited solid returns over the last few months and may actually be approaching a breakup point.

Wyndham Hotels Resorts

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wyndham Hotels Resorts are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Wyndham Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SUN ART and Wyndham Hotels

The main advantage of trading using opposite SUN ART and Wyndham Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUN ART 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 SUN ART RETAIL 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.