Correlation Between Wyndham Hotels and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Cognizant Technology 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 Cognizant Technology 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 Cognizant Technology Solutions, you can compare the effects of market volatilities on Wyndham Hotels and Cognizant Technology 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 Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Cognizant Technology.
Diversification Opportunities for Wyndham Hotels and Cognizant Technology
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wyndham and Cognizant is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology 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 Cognizant Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognizant Technology has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Cognizant Technology go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Cognizant Technology
Assuming the 90 days trading horizon Wyndham Hotels Resorts is expected to generate 0.78 times more return on investment than Cognizant Technology. However, Wyndham Hotels Resorts is 1.28 times less risky than Cognizant Technology. It trades about 0.35 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.24 per unit of risk. If you would invest 8,815 in Wyndham Hotels Resorts on September 2, 2024 and sell it today you would earn a total of 971.00 from holding Wyndham Hotels Resorts or generate 11.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Cognizant Technology |
Wyndham Hotels and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Cognizant Technology
The main advantage of trading using opposite Wyndham Hotels and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Cognizant Technology 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 Cognizant Technology will offset losses from the drop in Cognizant Technology's long position.| Wyndham Hotels vs. JD Sports Fashion | Wyndham Hotels vs. Intermediate Capital Group | Wyndham Hotels vs. Centaur Media | Wyndham Hotels vs. Zoom Video Communications |
| Cognizant Technology vs. Atalaya Mining | Cognizant Technology vs. Hochschild Mining plc | Cognizant Technology vs. Panther Metals PLC | Cognizant Technology vs. iShares Physical Silver |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |