Correlation Between Wyndham Hotels and Bright Horizons
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Bright Horizons 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 Bright Horizons 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 Bright Horizons Family, you can compare the effects of market volatilities on Wyndham Hotels and Bright Horizons 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 Bright Horizons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Bright Horizons.
Diversification Opportunities for Wyndham Hotels and Bright Horizons
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wyndham and Bright is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Bright Horizons Family in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Horizons Family 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 Bright Horizons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Horizons Family has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Bright Horizons go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Bright Horizons
Allowing for the 90-day total investment horizon Wyndham Hotels is expected to generate 1.71 times less return on investment than Bright Horizons. But when comparing it to its historical volatility, Wyndham Hotels Resorts is 2.66 times less risky than Bright Horizons. It trades about 0.29 of its potential returns per unit of risk. Bright Horizons Family is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 11,754 in Bright Horizons Family on November 18, 2024 and sell it today you would earn a total of 1,139 from holding Bright Horizons Family or generate 9.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. Bright Horizons Family
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Bright Horizons Family |
Wyndham Hotels and Bright Horizons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Bright Horizons
The main advantage of trading using opposite Wyndham Hotels and Bright Horizons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Bright Horizons 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 Bright Horizons will offset losses from the drop in Bright Horizons' long position.| Wyndham Hotels vs. InterContinental Hotels Group | Wyndham Hotels vs. Hyatt Hotels | Wyndham Hotels vs. Hilton Worldwide Holdings | Wyndham Hotels vs. Marriott International |
| Bright Horizons vs. Frontdoor | Bright Horizons vs. Smart Share Global | Bright Horizons vs. Mister Car Wash, | Bright Horizons vs. Carriage Services |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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