Correlation Between Wyndham Hotels and Nio

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

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

Diversification Opportunities for Wyndham Hotels and Nio

-0.81

Correlation Coefficient

Wyndham Hotels  Nio

Pay attention - limited upside

The 3 months correlation between Wyndham and Nio is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Nio Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nio Class A and Wyndham Hotels 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 Hotels Resorts are associated (or correlated) with Nio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nio Class A has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Nio go up and down completely randomly.

Pair Corralation between Wyndham Hotels and Nio

Allowing for the 90-day total investment horizon Wyndham Hotels Resorts is expected to generate 0.43 times more return on investment than Nio. However, Wyndham Hotels Resorts is 2.31 times less risky than Nio. It trades about 0.18 of its potential returns per unit of risk. Nio Class A is currently generating about -0.04 per unit of risk. If you would invest  7,911  in Wyndham Hotels Resorts on September 20, 2024 and sell it today you would earn a total of  1,933  from holding Wyndham Hotels Resorts or generate 24.43% return on investment over 90 days.

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

Wyndham Hotels Resorts  vs.  Nio Class A

Wyndham Hotels Resorts

Risk-Adjusted Performance

14 of 100

Good

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

Nio Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nio Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Wyndham Hotels and Nio

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

The idea behind Wyndham Hotels Resorts and Nio Class A 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.