Correlation Between PennantPark Investment and Wyndham Hotels
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Wyndham Hotels 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 PennantPark Investment and Wyndham Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Wyndham Hotels Resorts, you can compare the effects of market volatilities on PennantPark Investment and Wyndham Hotels 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 PennantPark Investment with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Wyndham Hotels.
Diversification Opportunities for PennantPark Investment and Wyndham Hotels
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PennantPark and Wyndham is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Wyndham Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wyndham Hotels Resorts and PennantPark Investment 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 PennantPark Investment are associated (or correlated) with Wyndham Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wyndham Hotels Resorts has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Wyndham Hotels go up and down completely randomly.
Pair Corralation between PennantPark Investment and Wyndham Hotels
Assuming the 90 days horizon PennantPark Investment is expected to generate 1.31 times more return on investment than Wyndham Hotels. However, PennantPark Investment is 1.31 times more volatile than Wyndham Hotels Resorts. It trades about 0.24 of its potential returns per unit of risk. Wyndham Hotels Resorts is currently generating about -0.06 per unit of risk. If you would invest 636.00 in PennantPark Investment on October 10, 2024 and sell it today you would earn a total of 49.00 from holding PennantPark Investment or generate 7.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
PennantPark Investment vs. Wyndham Hotels Resorts
Performance |
| Timeline |
| PennantPark Investment |
| Wyndham Hotels Resorts |
PennantPark Investment and Wyndham Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Wyndham Hotels
The main advantage of trading using opposite PennantPark Investment and Wyndham Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Wyndham Hotels 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 Wyndham Hotels will offset losses from the drop in Wyndham Hotels' long position.| PennantPark Investment vs. TOREX SEMICONDUCTOR LTD | PennantPark Investment vs. Carnegie Clean Energy | PennantPark Investment vs. CLEAN ENERGY FUELS | PennantPark Investment vs. ULTRA CLEAN HLDGS |
| Wyndham Hotels vs. ecotel communication ag | Wyndham Hotels vs. GEELY AUTOMOBILE | Wyndham Hotels vs. GAMESTOP | Wyndham Hotels vs. T Mobile |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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