Correlation Between Wyndham Hotels and Auto Trader
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Auto Trader 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 Auto Trader 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 Auto Trader Group, you can compare the effects of market volatilities on Wyndham Hotels and Auto Trader 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 Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Auto Trader.
Diversification Opportunities for Wyndham Hotels and Auto Trader
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wyndham and Auto is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Auto Trader Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auto Trader Group 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 Auto Trader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auto Trader Group has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Auto Trader go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Auto Trader
Assuming the 90 days trading horizon Wyndham Hotels Resorts is expected to generate 1.29 times more return on investment than Auto Trader. However, Wyndham Hotels is 1.29 times more volatile than Auto Trader Group. It trades about 0.05 of its potential returns per unit of risk. Auto Trader Group is currently generating about 0.04 per unit of risk. If you would invest 7,513 in Wyndham Hotels Resorts on October 27, 2024 and sell it today you would earn a total of 2,976 from holding Wyndham Hotels Resorts or generate 39.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 86.35% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. Auto Trader Group
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Auto Trader Group |
Wyndham Hotels and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Auto Trader
The main advantage of trading using opposite Wyndham Hotels and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Auto Trader 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 Auto Trader will offset losses from the drop in Auto Trader's long position.| Wyndham Hotels vs. United Utilities Group | Wyndham Hotels vs. Manulife Financial Corp | Wyndham Hotels vs. JD Sports Fashion | Wyndham Hotels vs. Commerzbank AG |
| Auto Trader vs. Samsung Electronics Co | Auto Trader vs. Samsung Electronics Co | Auto Trader vs. Toyota Motor Corp | Auto Trader vs. SoftBank Group Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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