Correlation Between Wyndham Hotels and International Consolidated
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and International Consolidated 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 International Consolidated 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 International Consolidated Airlines, you can compare the effects of market volatilities on Wyndham Hotels and International Consolidated 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 International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and International Consolidated.
Diversification Opportunities for Wyndham Hotels and International Consolidated
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wyndham and International is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and International Consolidated go up and down completely randomly.
Pair Corralation between Wyndham Hotels and International Consolidated
Assuming the 90 days trading horizon Wyndham Hotels is expected to generate 1.31 times less return on investment than International Consolidated. But when comparing it to its historical volatility, Wyndham Hotels Resorts is 1.03 times less risky than International Consolidated. It trades about 0.06 of its potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 13,275 in International Consolidated Airlines on August 24, 2024 and sell it today you would earn a total of 11,365 from holding International Consolidated Airlines or generate 85.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 79.8% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. International Consolidated Air
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| International Consolidated |
Wyndham Hotels and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and International Consolidated
The main advantage of trading using opposite Wyndham Hotels and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated's long position.| Wyndham Hotels vs. SBM Offshore NV | Wyndham Hotels vs. European Metals Holdings | Wyndham Hotels vs. Cairo Communication SpA | Wyndham Hotels vs. GoldMining |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Transaction History View history of all your transactions and understand their impact on performance |