Correlation Between Merit Medical and Wyndham Hotels
Can any of the company-specific risk be diversified away by investing in both Merit Medical 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 Merit Medical and Wyndham Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merit Medical Systems and Wyndham Hotels Resorts, you can compare the effects of market volatilities on Merit Medical 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 Merit Medical with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Wyndham Hotels.
Diversification Opportunities for Merit Medical and Wyndham Hotels
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Merit and Wyndham is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems 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 Merit Medical 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 Merit Medical Systems 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 Merit Medical i.e., Merit Medical and Wyndham Hotels go up and down completely randomly.
Pair Corralation between Merit Medical and Wyndham Hotels
Assuming the 90 days trading horizon Merit Medical Systems is expected to generate about the same return on investment as Wyndham Hotels Resorts. However, Merit Medical is 1.26 times more volatile than Wyndham Hotels Resorts. It trades about 0.27 of its potential returns per unit of risk. Wyndham Hotels Resorts is currently producing about 0.34 per unit of risk. If you would invest 8,100 in Wyndham Hotels Resorts on September 1, 2024 and sell it today you would earn a total of 1,100 from holding Wyndham Hotels Resorts or generate 13.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. Wyndham Hotels Resorts
Performance |
| Timeline |
| Merit Medical Systems |
| Wyndham Hotels Resorts |
Merit Medical and Wyndham Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Wyndham Hotels
The main advantage of trading using opposite Merit Medical and Wyndham Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical 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.| Merit Medical vs. Clean Energy Fuels | Merit Medical vs. Cardinal Health | Merit Medical vs. DiamondRock Hospitality | Merit Medical vs. Bumrungrad Hospital Public |
| Wyndham Hotels vs. URBAN OUTFITTERS | Wyndham Hotels vs. WT OFFSHORE | Wyndham Hotels vs. MTI WIRELESS EDGE | Wyndham Hotels vs. BW OFFSHORE 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |