Correlation Between Wyndham Hotels and DELTA AIR
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and DELTA AIR 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 DELTA AIR 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 DELTA AIR LINES, you can compare the effects of market volatilities on Wyndham Hotels and DELTA AIR 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 DELTA AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and DELTA AIR.
Diversification Opportunities for Wyndham Hotels and DELTA AIR
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wyndham and DELTA is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and DELTA AIR LINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DELTA AIR LINES 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 DELTA AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DELTA AIR LINES has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and DELTA AIR go up and down completely randomly.
Pair Corralation between Wyndham Hotels and DELTA AIR
Assuming the 90 days horizon Wyndham Hotels is expected to generate 1.37 times less return on investment than DELTA AIR. But when comparing it to its historical volatility, Wyndham Hotels Resorts is 1.33 times less risky than DELTA AIR. It trades about 0.1 of its potential returns per unit of risk. DELTA AIR LINES is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,383 in DELTA AIR LINES on October 28, 2024 and sell it today you would earn a total of 3,038 from holding DELTA AIR LINES or generate 89.8% 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. DELTA AIR LINES
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| DELTA AIR LINES |
Wyndham Hotels and DELTA AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and DELTA AIR
The main advantage of trading using opposite Wyndham Hotels and DELTA AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, DELTA AIR 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 DELTA AIR will offset losses from the drop in DELTA AIR's long position.| Wyndham Hotels vs. Axfood AB | Wyndham Hotels vs. CN MODERN DAIRY | Wyndham Hotels vs. Ebro Foods SA | Wyndham Hotels vs. Air Lease |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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