Correlation Between STMicroelectronics and Wyndham Hotels
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics 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 STMicroelectronics and Wyndham Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Wyndham Hotels Resorts, you can compare the effects of market volatilities on STMicroelectronics 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 STMicroelectronics with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Wyndham Hotels.
Diversification Opportunities for STMicroelectronics and Wyndham Hotels
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STMicroelectronics and Wyndham is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV 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 STMicroelectronics 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 STMicroelectronics NV 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 STMicroelectronics i.e., STMicroelectronics and Wyndham Hotels go up and down completely randomly.
Pair Corralation between STMicroelectronics and Wyndham Hotels
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the Wyndham Hotels. In addition to that, STMicroelectronics is 3.26 times more volatile than Wyndham Hotels Resorts. It trades about -0.25 of its total potential returns per unit of risk. Wyndham Hotels Resorts is currently generating about 0.14 per unit of volatility. If you would invest 9,700 in Wyndham Hotels Resorts on November 5, 2024 and sell it today you would earn a total of 250.00 from holding Wyndham Hotels Resorts or generate 2.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Wyndham Hotels Resorts
Performance |
| Timeline |
| STMicroelectronics |
| Wyndham Hotels Resorts |
STMicroelectronics and Wyndham Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Wyndham Hotels
The main advantage of trading using opposite STMicroelectronics and Wyndham Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics 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.| STMicroelectronics vs. Information Services International Dentsu | STMicroelectronics vs. Datadog | STMicroelectronics vs. INFORMATION SVC GRP | STMicroelectronics vs. Extra Space Storage |
| Wyndham Hotels vs. Fuji Media Holdings | Wyndham Hotels vs. Prosiebensat 1 Media | Wyndham Hotels vs. ANTA SPORTS PRODUCT | Wyndham Hotels vs. RCS MediaGroup SpA |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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