Correlation Between AcadeMedia and Wyndham Hotels
Can any of the company-specific risk be diversified away by investing in both AcadeMedia 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 AcadeMedia and Wyndham Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AcadeMedia AB and Wyndham Hotels Resorts, you can compare the effects of market volatilities on AcadeMedia 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 AcadeMedia with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of AcadeMedia and Wyndham Hotels.
Diversification Opportunities for AcadeMedia and Wyndham Hotels
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AcadeMedia and Wyndham is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding AcadeMedia AB 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 AcadeMedia 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 AcadeMedia AB 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 AcadeMedia i.e., AcadeMedia and Wyndham Hotels go up and down completely randomly.
Pair Corralation between AcadeMedia and Wyndham Hotels
Assuming the 90 days trading horizon AcadeMedia AB is expected to under-perform the Wyndham Hotels. But the stock apears to be less risky and, when comparing its historical volatility, AcadeMedia AB is 1.77 times less risky than Wyndham Hotels. The stock trades about -0.21 of its potential returns per unit of risk. The Wyndham Hotels Resorts is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 8,133 in Wyndham Hotels Resorts on August 24, 2024 and sell it today you would earn a total of 1,513 from holding Wyndham Hotels Resorts or generate 18.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AcadeMedia AB vs. Wyndham Hotels Resorts
Performance |
| Timeline |
| AcadeMedia AB |
| Wyndham Hotels Resorts |
AcadeMedia and Wyndham Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AcadeMedia and Wyndham Hotels
The main advantage of trading using opposite AcadeMedia and Wyndham Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AcadeMedia 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.| AcadeMedia vs. Nordic Semiconductor ASA | AcadeMedia vs. Beowulf Mining | AcadeMedia vs. Dolly Varden Silver | AcadeMedia vs. Taiwan Semiconductor Manufacturing |
| Wyndham Hotels vs. SBM Offshore NV | Wyndham Hotels vs. European Metals Holdings | Wyndham Hotels vs. Cairo Communication SpA | Wyndham Hotels vs. GoldMining |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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