Correlation Between Wyndham Hotels and Smithson Investment
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Smithson 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 Smithson 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 Smithson Investment Trust, you can compare the effects of market volatilities on Wyndham Hotels and Smithson 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 Smithson Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Smithson Investment.
Diversification Opportunities for Wyndham Hotels and Smithson Investment
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wyndham and Smithson is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Smithson Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smithson 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 Smithson Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smithson Investment Trust has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Smithson Investment go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Smithson Investment
Assuming the 90 days trading horizon Wyndham Hotels Resorts is expected to generate 1.5 times more return on investment than Smithson Investment. However, Wyndham Hotels is 1.5 times more volatile than Smithson Investment Trust. It trades about 0.15 of its potential returns per unit of risk. Smithson Investment Trust is currently generating about -0.11 per unit of risk. If you would invest 9,797 in Wyndham Hotels Resorts on September 24, 2024 and sell it today you would earn a total of 341.00 from holding Wyndham Hotels Resorts or generate 3.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. Smithson Investment Trust
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Smithson Investment Trust |
Wyndham Hotels and Smithson Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Smithson Investment
The main advantage of trading using opposite Wyndham Hotels and Smithson Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Smithson 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 Smithson Investment will offset losses from the drop in Smithson Investment's long position.| Wyndham Hotels vs. Uniper SE | Wyndham Hotels vs. Mulberry Group PLC | Wyndham Hotels vs. London Security Plc | Wyndham Hotels vs. Triad Group PLC |
| Smithson Investment vs. Austevoll Seafood ASA | Smithson Investment vs. Cornish Metals | Smithson Investment vs. AMG Advanced Metallurgical | Smithson Investment vs. Axfood AB |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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