Correlation Between Wyndham Hotels and Dominos Pizza
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Dominos Pizza 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 Dominos Pizza 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 Dominos Pizza, you can compare the effects of market volatilities on Wyndham Hotels and Dominos Pizza 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 Dominos Pizza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Dominos Pizza.
Diversification Opportunities for Wyndham Hotels and Dominos Pizza
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wyndham and Dominos is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Dominos Pizza in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominos Pizza 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 Dominos Pizza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominos Pizza has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Dominos Pizza go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Dominos Pizza
Allowing for the 90-day total investment horizon Wyndham Hotels Resorts is expected to generate 1.21 times more return on investment than Dominos Pizza. However, Wyndham Hotels is 1.21 times more volatile than Dominos Pizza. It trades about 0.21 of its potential returns per unit of risk. Dominos Pizza is currently generating about 0.14 per unit of risk. If you would invest 7,687 in Wyndham Hotels Resorts on September 4, 2024 and sell it today you would earn a total of 2,093 from holding Wyndham Hotels Resorts or generate 27.23% 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. Dominos Pizza
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Dominos Pizza |
Wyndham Hotels and Dominos Pizza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Dominos Pizza
The main advantage of trading using opposite Wyndham Hotels and Dominos Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Dominos Pizza 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 Dominos Pizza will offset losses from the drop in Dominos Pizza's long position.| Wyndham Hotels vs. InterContinental Hotels Group | Wyndham Hotels vs. Hyatt Hotels | Wyndham Hotels vs. Hilton Worldwide Holdings | Wyndham Hotels vs. Marriott International |
| Dominos Pizza vs. Hyatt Hotels | Dominos Pizza vs. Smart Share Global | Dominos Pizza vs. Sweetgreen | Dominos Pizza 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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