Correlation Between Wyndham Hotels and Netflix
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Netflix 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 Netflix 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 Netflix, you can compare the effects of market volatilities on Wyndham Hotels and Netflix 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 Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Netflix.
Diversification Opportunities for Wyndham Hotels and Netflix
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wyndham and Netflix is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix 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 Netflix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netflix has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Netflix go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Netflix
Assuming the 90 days horizon Wyndham Hotels is expected to generate 32.26 times less return on investment than Netflix. In addition to that, Wyndham Hotels is 1.05 times more volatile than Netflix. It trades about 0.0 of its total potential returns per unit of risk. Netflix is currently generating about 0.07 per unit of volatility. If you would invest 71,190 in Netflix on January 18, 2025 and sell it today you would earn a total of 12,880 from holding Netflix or generate 18.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. Netflix
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Netflix |
Wyndham Hotels and Netflix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Netflix
The main advantage of trading using opposite Wyndham Hotels and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Netflix 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 Netflix will offset losses from the drop in Netflix's long position.| Wyndham Hotels vs. Nucletron Electronic Aktiengesellschaft | Wyndham Hotels vs. KIMBALL ELECTRONICS | Wyndham Hotels vs. Aegean Airlines SA | Wyndham Hotels vs. UET United Electronic |
| Netflix vs. JD SPORTS FASH | Netflix vs. ScanSource | Netflix vs. BII Railway Transportation | Netflix vs. SOEDER SPORTFISKE 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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