Correlation Between WYNDHAM and Suburban Propane

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

By analyzing existing cross correlation between WYNDHAM DESTINATIONS INC and Suburban Propane Partners, you can compare the effects of market volatilities on WYNDHAM and Suburban Propane 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 WYNDHAM with a short position of Suburban Propane. Check out your portfolio center. Please also check ongoing floating volatility patterns of WYNDHAM and Suburban Propane.

Diversification Opportunities for WYNDHAM and Suburban Propane

0.18

Correlation Coefficient

WYNDHAM  Suburban Propane

Average diversification

The 3 months correlation between WYNDHAM and Suburban is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding WYNDHAM DESTINATIONS INC and Suburban Propane Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suburban Propane Partners and WYNDHAM 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 WYNDHAM DESTINATIONS INC are associated (or correlated) with Suburban Propane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suburban Propane Partners has no effect on the direction of WYNDHAM i.e., WYNDHAM and Suburban Propane go up and down completely randomly.

Pair Corralation between WYNDHAM and Suburban Propane

Assuming the 90 days trading horizon WYNDHAM is expected to generate 11.41 times less return on investment than Suburban Propane. But when comparing it to its historical volatility, WYNDHAM DESTINATIONS INC is 3.78 times less risky than Suburban Propane. It trades about 0.06 of its potential returns per unit of risk. Suburban Propane Partners is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,718  in Suburban Propane Partners on December 24, 2024 and sell it today you would earn a total of  359.00  from holding Suburban Propane Partners or generate 20.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	91.8%
Values	Daily Returns

WYNDHAM DESTINATIONS INC  vs.  Suburban Propane Partners

WYNDHAM DESTINATIONS INC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WYNDHAM DESTINATIONS INC are ranked lower than 4 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Suburban Propane Partners

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Suburban Propane Partners are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Suburban Propane demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WYNDHAM and Suburban Propane

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

The idea behind WYNDHAM DESTINATIONS INC and Suburban Propane Partners 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.