Correlation Between Marriott International and Wyndham Hotels
Can any of the company-specific risk be diversified away by investing in both Marriott International 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 Marriott International and Wyndham Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marriott International and Wyndham Hotels Resorts, you can compare the effects of market volatilities on Marriott International 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 Marriott International with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marriott International and Wyndham Hotels.
Diversification Opportunities for Marriott International and Wyndham Hotels
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marriott and Wyndham is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Marriott International 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 Marriott International 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 Marriott International 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 Marriott International i.e., Marriott International and Wyndham Hotels go up and down completely randomly.
Pair Corralation between Marriott International and Wyndham Hotels
Assuming the 90 days horizon Marriott International is expected to generate 1.53 times more return on investment than Wyndham Hotels. However, Marriott International is 1.53 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 0.17 per unit of risk. If you would invest 26,635 in Marriott International on November 4, 2024 and sell it today you would earn a total of 1,965 from holding Marriott International or generate 7.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marriott International vs. Wyndham Hotels Resorts
Performance |
| Timeline |
| Marriott International |
| Wyndham Hotels Resorts |
Marriott International and Wyndham Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marriott International and Wyndham Hotels
The main advantage of trading using opposite Marriott International and Wyndham Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marriott International 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.| Marriott International vs. Algonquin Power Utilities | Marriott International vs. Sunstone Hotel Investors | Marriott International vs. BRAEMAR HOTELS RES | Marriott International vs. United Utilities Group |
| Wyndham Hotels vs. Teradata Corp | Wyndham Hotels vs. PLAYTIKA HOLDING DL 01 | Wyndham Hotels vs. SILVER BULLET DATA | Wyndham Hotels vs. DICKER DATA LTD |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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