Correlation Between Wyndham Hotels and LBG Media
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and LBG Media 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 LBG Media 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 LBG Media PLC, you can compare the effects of market volatilities on Wyndham Hotels and LBG Media 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 LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and LBG Media.
Diversification Opportunities for Wyndham Hotels and LBG Media
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wyndham and LBG is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media PLC 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 LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and LBG Media go up and down completely randomly.
Pair Corralation between Wyndham Hotels and LBG Media
Assuming the 90 days trading horizon Wyndham Hotels is expected to generate 1.54 times less return on investment than LBG Media. But when comparing it to its historical volatility, Wyndham Hotels Resorts is 1.51 times less risky than LBG Media. It trades about 0.06 of its potential returns per unit of risk. LBG Media PLC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6,950 in LBG Media PLC on August 24, 2024 and sell it today you would earn a total of 6,150 from holding LBG Media PLC or generate 88.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.12% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. LBG Media PLC
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| LBG Media PLC |
Wyndham Hotels and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and LBG Media
The main advantage of trading using opposite Wyndham Hotels and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media'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 |
| LBG Media vs. Take Two Interactive Software | LBG Media vs. Polar Capital Technology | LBG Media vs. Spotify Technology SA | LBG Media vs. Sunny Optical Technology |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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