Correlation Between Wyndham Hotels and Rio Tinto
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Rio Tinto 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 Rio Tinto 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 Rio Tinto PLC, you can compare the effects of market volatilities on Wyndham Hotels and Rio Tinto 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 Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Rio Tinto.
Diversification Opportunities for Wyndham Hotels and Rio Tinto
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wyndham and Rio is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Rio Tinto PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto 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 Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto PLC has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Rio Tinto go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Rio Tinto
Assuming the 90 days trading horizon Wyndham Hotels Resorts is expected to generate 1.23 times more return on investment than Rio Tinto. However, Wyndham Hotels is 1.23 times more volatile than Rio Tinto PLC. It trades about 0.07 of its potential returns per unit of risk. Rio Tinto PLC is currently generating about 0.01 per unit of risk. If you would invest 6,678 in Wyndham Hotels Resorts on October 29, 2024 and sell it today you would earn a total of 3,811 from holding Wyndham Hotels Resorts or generate 57.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.55% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. Rio Tinto PLC
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Rio Tinto PLC |
Wyndham Hotels and Rio Tinto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Rio Tinto
The main advantage of trading using opposite Wyndham Hotels and Rio Tinto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Rio Tinto 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 Rio Tinto will offset losses from the drop in Rio Tinto's long position.| Wyndham Hotels vs. Lundin Mining Corp | Wyndham Hotels vs. iShares Physical Silver | Wyndham Hotels vs. Synthomer plc | Wyndham Hotels vs. Bisichi Mining PLC |
| Rio Tinto vs. Hilton Food Group | Rio Tinto vs. GlobalData PLC | Rio Tinto vs. Ebro Foods | Rio Tinto vs. Datalogic |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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