Correlation Between Wyndham Hotels and Cheesecake Factory
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Cheesecake Factory 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 Cheesecake Factory 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 The Cheesecake Factory, you can compare the effects of market volatilities on Wyndham Hotels and Cheesecake Factory 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 Cheesecake Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Cheesecake Factory.
Diversification Opportunities for Wyndham Hotels and Cheesecake Factory
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wyndham and Cheesecake is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and The Cheesecake Factory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Cheesecake Factory 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 Cheesecake Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Cheesecake Factory has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Cheesecake Factory go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Cheesecake Factory
Allowing for the 90-day total investment horizon Wyndham Hotels is expected to generate 1.97 times less return on investment than Cheesecake Factory. But when comparing it to its historical volatility, Wyndham Hotels Resorts is 1.78 times less risky than Cheesecake Factory. It trades about 0.2 of its potential returns per unit of risk. The Cheesecake Factory is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 4,668 in The Cheesecake Factory on September 12, 2024 and sell it today you would earn a total of 410.00 from holding The Cheesecake Factory or generate 8.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. The Cheesecake Factory
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| The Cheesecake Factory |
Wyndham Hotels and Cheesecake Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Cheesecake Factory
The main advantage of trading using opposite Wyndham Hotels and Cheesecake Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Cheesecake Factory 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 Cheesecake Factory will offset losses from the drop in Cheesecake Factory's long position.| Wyndham Hotels vs. InterContinental Hotels Group | Wyndham Hotels vs. Hilton Worldwide Holdings | Wyndham Hotels vs. Marriott International | Wyndham Hotels vs. Choice Hotels International |
| Cheesecake Factory vs. Dine Brands Global | Cheesecake Factory vs. Bloomin Brands | Cheesecake Factory vs. BJs Restaurants | Cheesecake Factory vs. Brinker 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 CEOs Directory module to screen CEOs from public companies around the world.
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