Correlation Between Wyndham Hotels and Hemisphere Energy
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Hemisphere Energy 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 Hemisphere Energy 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 Hemisphere Energy Corp, you can compare the effects of market volatilities on Wyndham Hotels and Hemisphere Energy 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 Hemisphere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Hemisphere Energy.
Diversification Opportunities for Wyndham Hotels and Hemisphere Energy
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Wyndham and Hemisphere is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Hemisphere Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hemisphere Energy Corp 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 Hemisphere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hemisphere Energy Corp has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Hemisphere Energy go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Hemisphere Energy
Assuming the 90 days horizon Wyndham Hotels is expected to generate 1.54 times less return on investment than Hemisphere Energy. But when comparing it to its historical volatility, Wyndham Hotels Resorts is 1.27 times less risky than Hemisphere Energy. It trades about 0.06 of its potential returns per unit of risk. Hemisphere Energy Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 64.00 in Hemisphere Energy Corp on September 13, 2024 and sell it today you would earn a total of 60.00 from holding Hemisphere Energy Corp or generate 93.75% 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. Hemisphere Energy Corp
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Hemisphere Energy Corp |
Wyndham Hotels and Hemisphere Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Hemisphere Energy
The main advantage of trading using opposite Wyndham Hotels and Hemisphere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Hemisphere Energy 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 Hemisphere Energy will offset losses from the drop in Hemisphere Energy'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 |
| Hemisphere Energy vs. Apple Inc | Hemisphere Energy vs. Apple Inc | Hemisphere Energy vs. Apple Inc | Hemisphere Energy vs. Apple Inc |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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