Correlation Between Wyndham Hotels and Monks Investment
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Monks Investment 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 Monks Investment 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 Monks Investment Trust, you can compare the effects of market volatilities on Wyndham Hotels and Monks Investment 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 Monks Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Monks Investment.
Diversification Opportunities for Wyndham Hotels and Monks Investment
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wyndham and Monks is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Monks Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monks Investment Trust 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 Monks Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monks Investment Trust has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Monks Investment go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Monks Investment
Assuming the 90 days trading horizon Wyndham Hotels Resorts is expected to generate 2.01 times more return on investment than Monks Investment. However, Wyndham Hotels is 2.01 times more volatile than Monks Investment Trust. It trades about 0.2 of its potential returns per unit of risk. Monks Investment Trust is currently generating about 0.19 per unit of risk. If you would invest 7,807 in Wyndham Hotels Resorts on September 3, 2024 and sell it today you would earn a total of 1,979 from holding Wyndham Hotels Resorts or generate 25.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. Monks Investment Trust
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Monks Investment Trust |
Wyndham Hotels and Monks Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Monks Investment
The main advantage of trading using opposite Wyndham Hotels and Monks Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Monks Investment 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 Monks Investment will offset losses from the drop in Monks Investment's long position.| Wyndham Hotels vs. Cairo Communication SpA | Wyndham Hotels vs. Medical Properties Trust | Wyndham Hotels vs. Verizon Communications | Wyndham Hotels vs. Fonix Mobile plc |
| Monks Investment vs. Batm Advanced Communications | Monks Investment vs. Norman Broadbent Plc | Monks Investment vs. Roadside Real Estate | Monks Investment vs. Wyndham Hotels Resorts |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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