Correlation Between COLUMBIA SPORTSWEAR and Wyndham Hotels
Can any of the company-specific risk be diversified away by investing in both COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR and Wyndham Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COLUMBIA SPORTSWEAR and Wyndham Hotels Resorts, you can compare the effects of market volatilities on COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of COLUMBIA SPORTSWEAR and Wyndham Hotels.
Diversification Opportunities for COLUMBIA SPORTSWEAR and Wyndham Hotels
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between COLUMBIA and Wyndham is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR i.e., COLUMBIA SPORTSWEAR and Wyndham Hotels go up and down completely randomly.
Pair Corralation between COLUMBIA SPORTSWEAR and Wyndham Hotels
Assuming the 90 days trading horizon COLUMBIA SPORTSWEAR is expected to generate 5.99 times less return on investment than Wyndham Hotels. But when comparing it to its historical volatility, COLUMBIA SPORTSWEAR is 1.03 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 0.09 of returns per unit of risk over similar time horizon. If you would invest 7,203 in Wyndham Hotels Resorts on November 8, 2024 and sell it today you would earn a total of 2,897 from holding Wyndham Hotels Resorts or generate 40.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
COLUMBIA SPORTSWEAR vs. Wyndham Hotels Resorts
Performance |
| Timeline |
| COLUMBIA SPORTSWEAR |
| Wyndham Hotels Resorts |
COLUMBIA SPORTSWEAR and Wyndham Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COLUMBIA SPORTSWEAR and Wyndham Hotels
The main advantage of trading using opposite COLUMBIA SPORTSWEAR and Wyndham Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COLUMBIA SPORTSWEAR 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.| COLUMBIA SPORTSWEAR vs. MARKET VECTR RETAIL | COLUMBIA SPORTSWEAR vs. Tradegate AG Wertpapierhandelsbank | COLUMBIA SPORTSWEAR vs. BOSTON BEER A | COLUMBIA SPORTSWEAR vs. CANON MARKETING JP |
| Wyndham Hotels vs. BJs Restaurants | Wyndham Hotels vs. OFFICE DEPOT | Wyndham Hotels vs. EPSILON HEALTHCARE LTD | Wyndham Hotels vs. Garofalo Health Care |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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