Correlation Between Wyndham Hotels and Biglari Holdings
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Biglari Holdings 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 Biglari Holdings 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 Biglari Holdings, you can compare the effects of market volatilities on Wyndham Hotels and Biglari Holdings 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 Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Biglari Holdings.
Diversification Opportunities for Wyndham Hotels and Biglari Holdings
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wyndham and Biglari is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari 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 Biglari Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biglari Holdings has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Biglari Holdings go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Biglari Holdings
Allowing for the 90-day total investment horizon Wyndham Hotels is expected to generate 2.32 times less return on investment than Biglari Holdings. But when comparing it to its historical volatility, Wyndham Hotels Resorts is 1.78 times less risky than Biglari Holdings. It trades about 0.28 of its potential returns per unit of risk. Biglari Holdings is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 17,300 in Biglari Holdings on September 4, 2024 and sell it today you would earn a total of 4,304 from holding Biglari Holdings or generate 24.88% 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. Biglari Holdings
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Biglari Holdings |
Wyndham Hotels and Biglari Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Biglari Holdings
The main advantage of trading using opposite Wyndham Hotels and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Biglari Holdings 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 Biglari Holdings will offset losses from the drop in Biglari Holdings' long position.| Wyndham Hotels vs. InterContinental Hotels Group | Wyndham Hotels vs. Hyatt Hotels | Wyndham Hotels vs. Hilton Worldwide Holdings | Wyndham Hotels vs. Marriott International |
| Biglari Holdings vs. Hyatt Hotels | Biglari Holdings vs. Smart Share Global | Biglari Holdings vs. Sweetgreen | Biglari Holdings 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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