Correlation Between Wyndham Hotels and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Berkshire Hathaway 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 Berkshire Hathaway 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 Berkshire Hathaway, you can compare the effects of market volatilities on Wyndham Hotels and Berkshire Hathaway 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 Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Berkshire Hathaway.
Diversification Opportunities for Wyndham Hotels and Berkshire Hathaway
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wyndham and Berkshire is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway 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 Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Berkshire Hathaway
Assuming the 90 days horizon Wyndham Hotels is expected to generate 1.04 times less return on investment than Berkshire Hathaway. In addition to that, Wyndham Hotels is 1.54 times more volatile than Berkshire Hathaway. It trades about 0.07 of its total potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.11 per unit of volatility. If you would invest 30,820 in Berkshire Hathaway on September 2, 2024 and sell it today you would earn a total of 15,065 from holding Berkshire Hathaway or generate 48.88% 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. Berkshire Hathaway
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Berkshire Hathaway |
Wyndham Hotels and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Berkshire Hathaway
The main advantage of trading using opposite Wyndham Hotels and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Berkshire Hathaway 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 Berkshire Hathaway will offset losses from the drop in Berkshire Hathaway's long position.| Wyndham Hotels vs. Khiron Life Sciences | Wyndham Hotels vs. ALGOMA STEEL GROUP | Wyndham Hotels vs. INFORMATION SVC GRP | Wyndham Hotels vs. Cass Information Systems |
| Berkshire Hathaway vs. GALENA MINING LTD | Berkshire Hathaway vs. MINCO SILVER | Berkshire Hathaway vs. PUBLIC STORAGE PRFO | Berkshire Hathaway vs. CarsalesCom |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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