Correlation Between Wyndham Hotels and Carpenter Technology
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Carpenter Technology 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 Carpenter Technology 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 Carpenter Technology, you can compare the effects of market volatilities on Wyndham Hotels and Carpenter Technology 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 Carpenter Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Carpenter Technology.
Diversification Opportunities for Wyndham Hotels and Carpenter Technology
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wyndham and Carpenter is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Carpenter Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carpenter Technology 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 Carpenter Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carpenter Technology has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Carpenter Technology go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Carpenter Technology
Assuming the 90 days horizon Wyndham Hotels Resorts is expected to generate 0.64 times more return on investment than Carpenter Technology. However, Wyndham Hotels Resorts is 1.57 times less risky than Carpenter Technology. It trades about 0.21 of its potential returns per unit of risk. Carpenter Technology is currently generating about -0.01 per unit of risk. If you would invest 9,115 in Wyndham Hotels Resorts on September 15, 2024 and sell it today you would earn a total of 647.00 from holding Wyndham Hotels Resorts or generate 7.1% 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. Carpenter Technology
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Carpenter Technology |
Wyndham Hotels and Carpenter Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Carpenter Technology
The main advantage of trading using opposite Wyndham Hotels and Carpenter Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Carpenter Technology 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 Carpenter Technology will offset losses from the drop in Carpenter Technology'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 |
| Carpenter Technology vs. PPHE HOTEL GROUP | Carpenter Technology vs. SEI INVESTMENTS | Carpenter Technology vs. Wyndham Hotels Resorts | Carpenter Technology vs. Virtus Investment Partners |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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