Correlation Between Manulife Financial and Wyndham Hotels
Can any of the company-specific risk be diversified away by investing in both Manulife Financial 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 Manulife Financial and Wyndham Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manulife Financial Corp and Wyndham Hotels Resorts, you can compare the effects of market volatilities on Manulife Financial 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 Manulife Financial with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Financial and Wyndham Hotels.
Diversification Opportunities for Manulife Financial and Wyndham Hotels
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Manulife and Wyndham is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp 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 Manulife Financial 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 Manulife Financial Corp 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 Manulife Financial i.e., Manulife Financial and Wyndham Hotels go up and down completely randomly.
Pair Corralation between Manulife Financial and Wyndham Hotels
Assuming the 90 days trading horizon Manulife Financial Corp is expected to generate 1.06 times more return on investment than Wyndham Hotels. However, Manulife Financial is 1.06 times more volatile than Wyndham Hotels Resorts. It trades about 0.18 of its potential returns per unit of risk. Wyndham Hotels Resorts is currently generating about 0.05 per unit of risk. If you would invest 2,449 in Manulife Financial Corp on October 28, 2024 and sell it today you would earn a total of 1,936 from holding Manulife Financial Corp or generate 79.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 42.69% |
| Values | Daily Returns |
Manulife Financial Corp vs. Wyndham Hotels Resorts
Performance |
| Timeline |
| Manulife Financial Corp |
| Wyndham Hotels Resorts |
Manulife Financial and Wyndham Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manulife Financial and Wyndham Hotels
The main advantage of trading using opposite Manulife Financial and Wyndham Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manulife Financial 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.| Manulife Financial vs. Odfjell Drilling | Manulife Financial vs. Zegona Communications Plc | Manulife Financial vs. Ubisoft Entertainment | Manulife Financial vs. JLEN Environmental Assets |
| Wyndham Hotels vs. Made Tech Group | Wyndham Hotels vs. Verizon Communications | Wyndham Hotels vs. Pressure Technologies Plc | Wyndham Hotels vs. Dairy Farm International |
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 Stocks Directory module to find actively traded stocks across global markets.
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