Correlation Between Wyndham Hotels and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Eastman Chemical 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 Eastman Chemical 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 Eastman Chemical Co, you can compare the effects of market volatilities on Wyndham Hotels and Eastman Chemical 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 Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Eastman Chemical.
Diversification Opportunities for Wyndham Hotels and Eastman Chemical
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wyndham and Eastman is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical 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 Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Eastman Chemical go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Eastman Chemical
Assuming the 90 days trading horizon Wyndham Hotels Resorts is expected to generate 1.59 times more return on investment than Eastman Chemical. However, Wyndham Hotels is 1.59 times more volatile than Eastman Chemical Co. It trades about 0.27 of its potential returns per unit of risk. Eastman Chemical Co is currently generating about -0.06 per unit of risk. If you would invest 7,776 in Wyndham Hotels Resorts on September 3, 2024 and sell it today you would earn a total of 2,010 from holding Wyndham Hotels Resorts or generate 25.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. Eastman Chemical Co
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Eastman Chemical |
Wyndham Hotels and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Eastman Chemical
The main advantage of trading using opposite Wyndham Hotels and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Eastman Chemical 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 Eastman Chemical will offset losses from the drop in Eastman Chemical's long position.| Wyndham Hotels vs. Cairo Communication SpA | Wyndham Hotels vs. Medical Properties Trust | Wyndham Hotels vs. Verizon Communications | Wyndham Hotels vs. Fonix Mobile plc |
| Eastman Chemical vs. Live Nation Entertainment | Eastman Chemical vs. Wyndham Hotels Resorts | Eastman Chemical vs. Scandic Hotels Group | Eastman Chemical vs. Centaur Media |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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