Correlation Between Wyndham Hotels and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Summit Hotel 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 Summit Hotel 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 Summit Hotel Properties, you can compare the effects of market volatilities on Wyndham Hotels and Summit Hotel 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 Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Summit Hotel.
Diversification Opportunities for Wyndham Hotels and Summit Hotel
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wyndham and Summit is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Summit Hotel Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Hotel Properties 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 Summit Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Hotel Properties has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Summit Hotel go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Summit Hotel
Assuming the 90 days horizon Wyndham Hotels Resorts is expected to generate 0.61 times more return on investment than Summit Hotel. However, Wyndham Hotels Resorts is 1.65 times less risky than Summit Hotel. It trades about 0.21 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about -0.07 per unit of risk. If you would invest 9,650 in Wyndham Hotels Resorts on November 2, 2024 and sell it today you would earn a total of 350.00 from holding Wyndham Hotels Resorts or generate 3.63% 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. Summit Hotel Properties
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Summit Hotel Properties |
Wyndham Hotels and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Summit Hotel
The main advantage of trading using opposite Wyndham Hotels and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Summit Hotel 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 Summit Hotel will offset losses from the drop in Summit Hotel's long position.| Wyndham Hotels vs. ecotel communication ag | Wyndham Hotels vs. Corporate Office Properties | Wyndham Hotels vs. Cairo Communication SpA | Wyndham Hotels vs. CITY OFFICE REIT |
| Summit Hotel vs. National Retail Properties | Summit Hotel vs. 24SEVENOFFICE GROUP AB | Summit Hotel vs. CLEAN ENERGY FUELS | Summit Hotel vs. Caseys General Stores |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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