Correlation Between Wyndham Hotels and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Sunny Optical 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 Sunny Optical 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 Sunny Optical Technology, you can compare the effects of market volatilities on Wyndham Hotels and Sunny Optical 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 Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Sunny Optical.
Diversification Opportunities for Wyndham Hotels and Sunny Optical
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wyndham and Sunny is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Sunny Optical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Optical 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 Sunny Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Optical Technology has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Sunny Optical go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Sunny Optical
Assuming the 90 days trading horizon Wyndham Hotels is expected to generate 1.35 times less return on investment than Sunny Optical. But when comparing it to its historical volatility, Wyndham Hotels Resorts is 2.17 times less risky than Sunny Optical. It trades about 0.16 of its potential returns per unit of risk. Sunny Optical Technology is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,925 in Sunny Optical Technology on September 21, 2024 and sell it today you would earn a total of 2,130 from holding Sunny Optical Technology or generate 43.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. Sunny Optical Technology
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Sunny Optical Technology |
Wyndham Hotels and Sunny Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Sunny Optical
The main advantage of trading using opposite Wyndham Hotels and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Sunny Optical 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 Sunny Optical will offset losses from the drop in Sunny Optical's long position.| Wyndham Hotels vs. Team Internet Group | Wyndham Hotels vs. National Beverage Corp | Wyndham Hotels vs. Batm Advanced Communications | Wyndham Hotels vs. Charter Communications Cl |
| Sunny Optical vs. Wyndham Hotels Resorts | Sunny Optical vs. Advanced Medical Solutions | Sunny Optical vs. Intermediate Capital Group | Sunny Optical 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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