Correlation Between Wyndham Hotels and Hisense Home
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Hisense Home 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 Hisense Home 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 Hisense Home Appliances, you can compare the effects of market volatilities on Wyndham Hotels and Hisense Home 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 Hisense Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Hisense Home.
Diversification Opportunities for Wyndham Hotels and Hisense Home
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Wyndham and Hisense is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Hisense Home Appliances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hisense Home Appliances 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 Hisense Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hisense Home Appliances has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Hisense Home go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Hisense Home
Assuming the 90 days horizon Wyndham Hotels Resorts is expected to generate 0.69 times more return on investment than Hisense Home. However, Wyndham Hotels Resorts is 1.44 times less risky than Hisense Home. It trades about 0.22 of its potential returns per unit of risk. Hisense Home Appliances is currently generating about -0.13 per unit of risk. If you would invest 8,400 in Wyndham Hotels Resorts on August 29, 2024 and sell it today you would earn a total of 750.00 from holding Wyndham Hotels Resorts or generate 8.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. Hisense Home Appliances
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Hisense Home Appliances |
Wyndham Hotels and Hisense Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Hisense Home
The main advantage of trading using opposite Wyndham Hotels and Hisense Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Hisense Home 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 Hisense Home will offset losses from the drop in Hisense Home's long position.The idea behind Wyndham Hotels Resorts and Hisense Home Appliances pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hisense Home vs. Superior Plus Corp | Hisense Home vs. NMI Holdings | Hisense Home vs. Origin Agritech | Hisense Home vs. SIVERS SEMICONDUCTORS 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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