Correlation Between Alfa Financial and Wyndham Hotels
Can any of the company-specific risk be diversified away by investing in both Alfa Financial 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 Alfa Financial and Wyndham Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfa Financial Software and Wyndham Hotels Resorts, you can compare the effects of market volatilities on Alfa Financial 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 Alfa Financial with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and Wyndham Hotels.
Diversification Opportunities for Alfa Financial and Wyndham Hotels
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alfa and Wyndham is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software 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 Alfa Financial 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 Alfa Financial Software 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 Alfa Financial i.e., Alfa Financial and Wyndham Hotels go up and down completely randomly.
Pair Corralation between Alfa Financial and Wyndham Hotels
Assuming the 90 days trading horizon Alfa Financial is expected to generate 13.18 times less return on investment than Wyndham Hotels. In addition to that, Alfa Financial is 1.56 times more volatile than Wyndham Hotels Resorts. It trades about 0.01 of its total potential returns per unit of risk. Wyndham Hotels Resorts is currently generating about 0.31 per unit of volatility. If you would invest 8,972 in Wyndham Hotels Resorts on September 3, 2024 and sell it today you would earn a total of 814.00 from holding Wyndham Hotels Resorts or generate 9.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Financial Software vs. Wyndham Hotels Resorts
Performance |
| Timeline |
| Alfa Financial Software |
| Wyndham Hotels Resorts |
Alfa Financial and Wyndham Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and Wyndham Hotels
The main advantage of trading using opposite Alfa Financial and Wyndham Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial 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.| Alfa Financial vs. Samsung Electronics Co | Alfa Financial vs. Samsung Electronics Co | Alfa Financial vs. Hyundai Motor | Alfa Financial vs. Toyota Motor Corp |
| Wyndham Hotels vs. Cairo Communication SpA | Wyndham Hotels vs. Medical Properties Trust | Wyndham Hotels vs. Verizon Communications | Wyndham Hotels vs. Fonix Mobile plc |
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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