Correlation Between Wyndham Hotels and Air Products
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Air Products 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 Air Products 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 Air Products Chemicals, you can compare the effects of market volatilities on Wyndham Hotels and Air Products 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 Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Air Products.
Diversification Opportunities for Wyndham Hotels and Air Products
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Wyndham and Air is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Air Products Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products Chemicals 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 Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products Chemicals has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Air Products go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Air Products
Assuming the 90 days trading horizon Wyndham Hotels Resorts is expected to generate 0.83 times more return on investment than Air Products. However, Wyndham Hotels Resorts is 1.2 times less risky than Air Products. It trades about 0.03 of its potential returns per unit of risk. Air Products Chemicals is currently generating about -0.07 per unit of risk. If you would invest 10,516 in Wyndham Hotels Resorts on November 28, 2024 and sell it today you would earn a total of 81.00 from holding Wyndham Hotels Resorts or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. Air Products Chemicals
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Air Products Chemicals |
Wyndham Hotels and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Air Products
The main advantage of trading using opposite Wyndham Hotels and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Wyndham Hotels vs. JB Hunt Transport | Wyndham Hotels vs. Hilton Food Group | Wyndham Hotels vs. Molson Coors Beverage | Wyndham Hotels vs. Clean Power Hydrogen |
| Air Products vs. Flutter Entertainment PLC | Air Products vs. LBG Media PLC | Air Products vs. Electronic Arts | Air Products vs. G5 Entertainment AB |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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