Correlation Between Wyndham Hotels and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Algonquin Power 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 Algonquin Power 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 Algonquin Power Utilities, you can compare the effects of market volatilities on Wyndham Hotels and Algonquin Power 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 Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Algonquin Power.
Diversification Opportunities for Wyndham Hotels and Algonquin Power
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Wyndham and Algonquin is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Algonquin Power Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algonquin Power Utilities 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 Algonquin Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algonquin Power Utilities has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Algonquin Power go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Algonquin Power
Assuming the 90 days horizon Wyndham Hotels Resorts is expected to generate 0.84 times more return on investment than Algonquin Power. However, Wyndham Hotels Resorts is 1.18 times less risky than Algonquin Power. It trades about 0.06 of its potential returns per unit of risk. Algonquin Power Utilities is currently generating about -0.02 per unit of risk. If you would invest 6,529 in Wyndham Hotels Resorts on November 29, 2024 and sell it today you would earn a total of 3,571 from holding Wyndham Hotels Resorts or generate 54.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. Algonquin Power Utilities
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Algonquin Power Utilities |
Wyndham Hotels and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Algonquin Power
The main advantage of trading using opposite Wyndham Hotels and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Algonquin Power 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 Algonquin Power will offset losses from the drop in Algonquin Power's long position.| Wyndham Hotels vs. Hyatt Hotels | Wyndham Hotels vs. National Retail Properties | Wyndham Hotels vs. Choice Hotels International | Wyndham Hotels vs. DALATA HOTEL |
| Algonquin Power vs. LI METAL P | Algonquin Power vs. COMPUTERSHARE | Algonquin Power vs. JD SPORTS FASH | Algonquin Power vs. FIREWEED METALS P |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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