Correlation Between Supermarket Income and Wyndham Hotels
Can any of the company-specific risk be diversified away by investing in both Supermarket Income 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 Supermarket Income and Wyndham Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Supermarket Income REIT and Wyndham Hotels Resorts, you can compare the effects of market volatilities on Supermarket Income 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 Supermarket Income with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supermarket Income and Wyndham Hotels.
Diversification Opportunities for Supermarket Income and Wyndham Hotels
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Supermarket and Wyndham is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Supermarket Income REIT 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 Supermarket Income 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 Supermarket Income REIT 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 Supermarket Income i.e., Supermarket Income and Wyndham Hotels go up and down completely randomly.
Pair Corralation between Supermarket Income and Wyndham Hotels
Assuming the 90 days trading horizon Supermarket Income is expected to generate 8.75 times less return on investment than Wyndham Hotels. But when comparing it to its historical volatility, Supermarket Income REIT is 1.47 times less risky than Wyndham Hotels. It trades about 0.06 of its potential returns per unit of risk. Wyndham Hotels Resorts is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 8,815 in Wyndham Hotels Resorts on September 2, 2024 and sell it today you would earn a total of 971.00 from holding Wyndham Hotels Resorts or generate 11.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Supermarket Income REIT vs. Wyndham Hotels Resorts
Performance |
| Timeline |
| Supermarket Income REIT |
| Wyndham Hotels Resorts |
Supermarket Income and Wyndham Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Supermarket Income and Wyndham Hotels
The main advantage of trading using opposite Supermarket Income and Wyndham Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supermarket Income 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.| Supermarket Income vs. Derwent London PLC | Supermarket Income vs. Workspace Group PLC | Supermarket Income vs. Diversified Energy | Supermarket Income vs. Thyssenkrupp AG ON |
| Wyndham Hotels vs. JD Sports Fashion | Wyndham Hotels vs. Intermediate Capital Group | Wyndham Hotels vs. Centaur Media | Wyndham Hotels vs. Zoom Video Communications |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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