Correlation Between Wyndham Hotels and Marriott International
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Marriott International 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 Marriott International 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 Marriott International, you can compare the effects of market volatilities on Wyndham Hotels and Marriott International 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 Marriott International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Marriott International.
Diversification Opportunities for Wyndham Hotels and Marriott International
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wyndham and Marriott is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Marriott International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott International 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 Marriott International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marriott International has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Marriott International go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Marriott International
Assuming the 90 days horizon Wyndham Hotels is expected to generate 1.01 times less return on investment than Marriott International. In addition to that, Wyndham Hotels is 1.14 times more volatile than Marriott International. It trades about 0.08 of its total potential returns per unit of risk. Marriott International is currently generating about 0.1 per unit of volatility. If you would invest 18,225 in Marriott International on September 12, 2024 and sell it today you would earn a total of 9,415 from holding Marriott International or generate 51.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. Marriott International
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Marriott International |
Wyndham Hotels and Marriott International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Marriott International
The main advantage of trading using opposite Wyndham Hotels and Marriott International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Marriott International 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 Marriott International will offset losses from the drop in Marriott International's long position.| Wyndham Hotels vs. Hyatt Hotels | Wyndham Hotels vs. InterContinental Hotels Group | Wyndham Hotels vs. INTERCONT HOTELS | Wyndham Hotels vs. Choice Hotels International |
| Marriott International vs. Hyatt Hotels | Marriott International vs. InterContinental Hotels Group | Marriott International vs. INTERCONT HOTELS | Marriott International vs. Wyndham Hotels Resorts |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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