Correlation Between Delta Air and Wyndham Hotels
Can any of the company-specific risk be diversified away by investing in both Delta Air 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 Delta Air and Wyndham Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delta Air Lines and Wyndham Hotels Resorts, you can compare the effects of market volatilities on Delta Air 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 Delta Air with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Wyndham Hotels.
Diversification Opportunities for Delta Air and Wyndham Hotels
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Delta and Wyndham is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines 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 Delta Air 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 Delta Air Lines 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 Delta Air i.e., Delta Air and Wyndham Hotels go up and down completely randomly.
Pair Corralation between Delta Air and Wyndham Hotels
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 2.53 times more return on investment than Wyndham Hotels. However, Delta Air is 2.53 times more volatile than Wyndham Hotels Resorts. It trades about 0.28 of its potential returns per unit of risk. Wyndham Hotels Resorts is currently generating about 0.21 per unit of risk. If you would invest 6,004 in Delta Air Lines on November 5, 2024 and sell it today you would earn a total of 851.00 from holding Delta Air Lines or generate 14.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. Wyndham Hotels Resorts
Performance |
| Timeline |
| Delta Air Lines |
| Wyndham Hotels Resorts |
Delta Air and Wyndham Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Wyndham Hotels
The main advantage of trading using opposite Delta Air and Wyndham Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air 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.| Delta Air vs. Scottish American Investment | Delta Air vs. Take Two Interactive Software | Delta Air vs. Vitec Software Group | Delta Air vs. Polar Capital Technology |
| Wyndham Hotels vs. Universal Health Services | Wyndham Hotels vs. HCA Healthcare | Wyndham Hotels vs. Wheaton Precious Metals | Wyndham Hotels vs. MyHealthChecked Plc |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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