Correlation Between Wyndham Hotels and Huazhu
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Huazhu 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 Huazhu 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 Huazhu Group, you can compare the effects of market volatilities on Wyndham Hotels and Huazhu 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 Huazhu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Huazhu.
Diversification Opportunities for Wyndham Hotels and Huazhu
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wyndham and Huazhu is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Huazhu Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huazhu Group 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 Huazhu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huazhu Group has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Huazhu go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Huazhu
Allowing for the 90-day total investment horizon Wyndham Hotels Resorts is expected to generate 0.68 times more return on investment than Huazhu. However, Wyndham Hotels Resorts is 1.46 times less risky than Huazhu. It trades about 0.15 of its potential returns per unit of risk. Huazhu Group is currently generating about 0.0 per unit of risk. If you would invest 6,885 in Wyndham Hotels Resorts on August 24, 2024 and sell it today you would earn a total of 2,754 from holding Wyndham Hotels Resorts or generate 40.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. Huazhu Group
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Huazhu Group |
Wyndham Hotels and Huazhu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Huazhu
The main advantage of trading using opposite Wyndham Hotels and Huazhu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Huazhu 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 Huazhu will offset losses from the drop in Huazhu'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 |
| Huazhu vs. GreenTree Hospitality Group | Huazhu vs. Soho House Co | Huazhu vs. InterContinental Hotels Group | Huazhu vs. The Intergroup |
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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