Correlation Between Warner Music and Wyndham Hotels
Can any of the company-specific risk be diversified away by investing in both Warner Music 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 Warner Music and Wyndham Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Warner Music Group and Wyndham Hotels Resorts, you can compare the effects of market volatilities on Warner Music 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 Warner Music with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Wyndham Hotels.
Diversification Opportunities for Warner Music and Wyndham Hotels
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Warner and Wyndham is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group 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 Warner Music 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 Warner Music Group 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 Warner Music i.e., Warner Music and Wyndham Hotels go up and down completely randomly.
Pair Corralation between Warner Music and Wyndham Hotels
Assuming the 90 days horizon Warner Music Group is expected to under-perform the Wyndham Hotels. In addition to that, Warner Music is 1.38 times more volatile than Wyndham Hotels Resorts. It trades about -0.02 of its total potential returns per unit of risk. Wyndham Hotels Resorts is currently generating about 0.2 per unit of volatility. If you would invest 9,050 in Wyndham Hotels Resorts on September 13, 2024 and sell it today you would earn a total of 600.00 from holding Wyndham Hotels Resorts or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warner Music Group vs. Wyndham Hotels Resorts
Performance |
| Timeline |
| Warner Music Group |
| Wyndham Hotels Resorts |
Warner Music and Wyndham Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Wyndham Hotels
The main advantage of trading using opposite Warner Music and Wyndham Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music 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.| Warner Music vs. The Walt Disney | Warner Music vs. Charter Communications | Warner Music vs. Superior Plus Corp | Warner Music vs. SIVERS SEMICONDUCTORS AB |
| Wyndham Hotels vs. Hyatt Hotels | Wyndham Hotels vs. InterContinental Hotels Group | Wyndham Hotels vs. INTERCONT HOTELS | Wyndham Hotels vs. Choice Hotels International |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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