Correlation Between BYD ELECTRONIC and Wyndham Hotels
Can any of the company-specific risk be diversified away by investing in both BYD ELECTRONIC 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 BYD ELECTRONIC and Wyndham Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD ELECTRONIC and Wyndham Hotels Resorts, you can compare the effects of market volatilities on BYD ELECTRONIC 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 BYD ELECTRONIC with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD ELECTRONIC and Wyndham Hotels.
Diversification Opportunities for BYD ELECTRONIC and Wyndham Hotels
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BYD and Wyndham is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding BYD ELECTRONIC 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 BYD ELECTRONIC 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 BYD ELECTRONIC 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 BYD ELECTRONIC i.e., BYD ELECTRONIC and Wyndham Hotels go up and down completely randomly.
Pair Corralation between BYD ELECTRONIC and Wyndham Hotels
Assuming the 90 days trading horizon BYD ELECTRONIC is expected to generate 4.22 times more return on investment than Wyndham Hotels. However, BYD ELECTRONIC is 4.22 times more volatile than Wyndham Hotels Resorts. It trades about 0.26 of its potential returns per unit of risk. Wyndham Hotels Resorts is currently generating about 0.25 per unit of risk. If you would invest 367.00 in BYD ELECTRONIC on September 12, 2024 and sell it today you would earn a total of 138.00 from holding BYD ELECTRONIC or generate 37.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD ELECTRONIC vs. Wyndham Hotels Resorts
Performance |
| Timeline |
| BYD ELECTRONIC |
| Wyndham Hotels Resorts |
BYD ELECTRONIC and Wyndham Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD ELECTRONIC and Wyndham Hotels
The main advantage of trading using opposite BYD ELECTRONIC and Wyndham Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD ELECTRONIC 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.| BYD ELECTRONIC vs. Wyndham Hotels Resorts | BYD ELECTRONIC vs. Hyatt Hotels | BYD ELECTRONIC vs. Xenia Hotels Resorts | BYD ELECTRONIC vs. Park Hotels Resorts |
| 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 CEOs Directory module to screen CEOs from public companies around the world.
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