Correlation Between Wyndham Hotels and Clean Power
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Clean Power 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 Clean Power 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 Clean Power Hydrogen, you can compare the effects of market volatilities on Wyndham Hotels and Clean Power 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 Clean Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Clean Power.
Diversification Opportunities for Wyndham Hotels and Clean Power
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wyndham and Clean is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Clean Power Hydrogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Power Hydrogen 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 Clean Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Power Hydrogen has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Clean Power go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Clean Power
Assuming the 90 days trading horizon Wyndham Hotels is expected to generate 1.55 times less return on investment than Clean Power. But when comparing it to its historical volatility, Wyndham Hotels Resorts is 1.74 times less risky than Clean Power. It trades about 0.21 of its potential returns per unit of risk. Clean Power Hydrogen is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 730.00 in Clean Power Hydrogen on November 5, 2024 and sell it today you would earn a total of 45.00 from holding Clean Power Hydrogen or generate 6.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. Clean Power Hydrogen
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Clean Power Hydrogen |
Wyndham Hotels and Clean Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Clean Power
The main advantage of trading using opposite Wyndham Hotels and Clean Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Clean Power 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 Clean Power will offset losses from the drop in Clean Power's long position.| Wyndham Hotels vs. Universal Health Services | Wyndham Hotels vs. HCA Healthcare | Wyndham Hotels vs. Wheaton Precious Metals | Wyndham Hotels vs. MyHealthChecked Plc |
| Clean Power vs. Ebro Foods | Clean Power vs. Samsung Electronics Co | Clean Power vs. Heavitree Brewery | Clean Power vs. Leroy Seafood Group |
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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