Correlation Between Microsoft and Wyndham Hotels
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Wyndham Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Wyndham Hotels Resorts, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Wyndham Hotels.
Diversification Opportunities for Microsoft and Wyndham Hotels
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Wyndham is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft 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 Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Wyndham Hotels go up and down completely randomly.
Pair Corralation between Microsoft and Wyndham Hotels
Given the investment horizon of 90 days Microsoft is expected to under-perform the Wyndham Hotels. In addition to that, Microsoft is 2.46 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 0.17 per unit of volatility. If you would invest 9,650 in Wyndham Hotels Resorts on November 4, 2024 and sell it today you would earn a total of 300.00 from holding Wyndham Hotels Resorts or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Microsoft vs. Wyndham Hotels Resorts
Performance |
| Timeline |
| Microsoft |
| Wyndham Hotels Resorts |
Microsoft and Wyndham Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Wyndham Hotels
The main advantage of trading using opposite Microsoft and Wyndham Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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