Correlation Between BII Railway and Wyndham Hotels
Can any of the company-specific risk be diversified away by investing in both BII Railway 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 BII Railway and Wyndham Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and Wyndham Hotels Resorts, you can compare the effects of market volatilities on BII Railway 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 BII Railway with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and Wyndham Hotels.
Diversification Opportunities for BII Railway and Wyndham Hotels
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between BII and Wyndham is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation 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 BII Railway 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 BII Railway Transportation 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 BII Railway i.e., BII Railway and Wyndham Hotels go up and down completely randomly.
Pair Corralation between BII Railway and Wyndham Hotels
Assuming the 90 days horizon BII Railway Transportation is expected to under-perform the Wyndham Hotels. But the stock apears to be less risky and, when comparing its historical volatility, BII Railway Transportation is 1.01 times less risky than Wyndham Hotels. The stock trades about -0.09 of its potential returns per unit of risk. The Wyndham Hotels Resorts is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 8,050 in Wyndham Hotels Resorts on September 3, 2024 and sell it today you would earn a total of 1,100 from holding Wyndham Hotels Resorts or generate 13.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BII Railway Transportation vs. Wyndham Hotels Resorts
Performance |
| Timeline |
| BII Railway Transpor |
| Wyndham Hotels Resorts |
BII Railway and Wyndham Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and Wyndham Hotels
The main advantage of trading using opposite BII Railway and Wyndham Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway 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.| BII Railway vs. Entravision Communications | BII Railway vs. Consolidated Communications Holdings | BII Railway vs. Chunghwa Telecom Co | BII Railway vs. Verizon Communications |
| Wyndham Hotels vs. Salesforce | Wyndham Hotels vs. Cleanaway Waste Management | Wyndham Hotels vs. BII Railway Transportation | Wyndham Hotels vs. BROADSTNET LEADL 00025 |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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