Correlation Between PPHE HOTEL and Wyndham Hotels
Can any of the company-specific risk be diversified away by investing in both PPHE HOTEL and Wyndham Hotels 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 PPHE HOTEL and Wyndham Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPHE HOTEL GROUP and Wyndham Hotels Resorts, you can compare the effects of market volatilities on PPHE HOTEL and Wyndham Hotels 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 PPHE HOTEL with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE HOTEL and Wyndham Hotels.
Diversification Opportunities for PPHE HOTEL and Wyndham Hotels
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PPHE and Wyndham is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding PPHE HOTEL GROUP and Wyndham Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wyndham Hotels Resorts and PPHE HOTEL 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 PPHE HOTEL GROUP are associated (or correlated) with Wyndham Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wyndham Hotels Resorts has no effect on the direction of PPHE HOTEL i.e., PPHE HOTEL and Wyndham Hotels go up and down completely randomly.
Pair Corralation between PPHE HOTEL and Wyndham Hotels
Assuming the 90 days trading horizon PPHE HOTEL is expected to generate 10.28 times less return on investment than Wyndham Hotels. But when comparing it to its historical volatility, PPHE HOTEL GROUP is 1.26 times less risky than Wyndham Hotels. It trades about 0.02 of its potential returns per unit of risk. Wyndham Hotels Resorts is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 6,638 in Wyndham Hotels Resorts on September 15, 2024 and sell it today you would earn a total of 3,124 from holding Wyndham Hotels Resorts or generate 47.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPHE HOTEL GROUP vs. Wyndham Hotels Resorts
Performance |
| Timeline |
| PPHE HOTEL GROUP |
| Wyndham Hotels Resorts |
PPHE HOTEL and Wyndham Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPHE HOTEL and Wyndham Hotels
The main advantage of trading using opposite PPHE HOTEL and Wyndham Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE HOTEL position performs unexpectedly, Wyndham Hotels 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 Wyndham Hotels will offset losses from the drop in Wyndham Hotels' long position.The idea behind PPHE HOTEL GROUP and Wyndham Hotels Resorts pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Wyndham Hotels vs. Hyatt Hotels | Wyndham Hotels vs. InterContinental Hotels Group | Wyndham Hotels vs. INTERCONT HOTELS | Wyndham Hotels vs. Choice Hotels International |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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