Correlation Between Wyndham Hotels and Arcos Dorados
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Arcos Dorados 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 Wyndham Hotels and Arcos Dorados into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wyndham Hotels Resorts and Arcos Dorados Holdings, you can compare the effects of market volatilities on Wyndham Hotels and Arcos Dorados 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 Wyndham Hotels with a short position of Arcos Dorados. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Arcos Dorados.
Diversification Opportunities for Wyndham Hotels and Arcos Dorados
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wyndham and Arcos is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Arcos Dorados Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcos Dorados Holdings and Wyndham Hotels 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 Wyndham Hotels Resorts are associated (or correlated) with Arcos Dorados. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcos Dorados Holdings has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Arcos Dorados go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Arcos Dorados
Allowing for the 90-day total investment horizon Wyndham Hotels Resorts is expected to generate 1.12 times more return on investment than Arcos Dorados. However, Wyndham Hotels is 1.12 times more volatile than Arcos Dorados Holdings. It trades about 0.28 of its potential returns per unit of risk. Arcos Dorados Holdings is currently generating about -0.1 per unit of risk. If you would invest 8,876 in Wyndham Hotels Resorts on September 4, 2024 and sell it today you would earn a total of 904.00 from holding Wyndham Hotels Resorts or generate 10.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. Arcos Dorados Holdings
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Arcos Dorados Holdings |
Wyndham Hotels and Arcos Dorados Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Arcos Dorados
The main advantage of trading using opposite Wyndham Hotels and Arcos Dorados positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Arcos Dorados 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 Arcos Dorados will offset losses from the drop in Arcos Dorados' long position.| Wyndham Hotels vs. InterContinental Hotels Group | Wyndham Hotels vs. Hyatt Hotels | Wyndham Hotels vs. Hilton Worldwide Holdings | Wyndham Hotels vs. Marriott International |
| Arcos Dorados vs. Hyatt Hotels | Arcos Dorados vs. Smart Share Global | Arcos Dorados vs. Sweetgreen | Arcos Dorados vs. Wyndham Hotels Resorts |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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