Correlation Between JLF INVESTMENT and Wyndham Hotels

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Can any of the company-specific risk be diversified away by investing in both JLF INVESTMENT 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 JLF INVESTMENT and Wyndham Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JLF INVESTMENT and Wyndham Hotels Resorts, you can compare the effects of market volatilities on JLF INVESTMENT 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 JLF INVESTMENT with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of JLF INVESTMENT and Wyndham Hotels.

Diversification Opportunities for JLF INVESTMENT and Wyndham Hotels

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between JLF and Wyndham is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding JLF INVESTMENT 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 JLF INVESTMENT 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 JLF INVESTMENT 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 JLF INVESTMENT i.e., JLF INVESTMENT and Wyndham Hotels go up and down completely randomly.

Pair Corralation between JLF INVESTMENT and Wyndham Hotels

Assuming the 90 days trading horizon JLF INVESTMENT is expected to under-perform the Wyndham Hotels. In addition to that, JLF INVESTMENT is 1.41 times more volatile than Wyndham Hotels Resorts. It trades about -0.04 of its total potential returns per unit of risk. Wyndham Hotels Resorts is currently generating about 0.06 per unit of volatility. If you would invest  6,529  in Wyndham Hotels Resorts on October 11, 2024 and sell it today you would earn a total of  3,071  from holding Wyndham Hotels Resorts or generate 47.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

JLF INVESTMENT  vs.  Wyndham Hotels Resorts

 Performance 
       Timeline  
JLF INVESTMENT 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days JLF INVESTMENT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, JLF INVESTMENT is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.
Wyndham Hotels Resorts 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Wyndham Hotels Resorts are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Wyndham Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

JLF INVESTMENT and Wyndham Hotels Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JLF INVESTMENT and Wyndham Hotels

The main advantage of trading using opposite JLF INVESTMENT and Wyndham Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JLF INVESTMENT 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 JLF INVESTMENT 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.
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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