Correlation Between Wyndham Hotels and McDonalds
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and McDonalds 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 McDonalds 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 McDonalds, you can compare the effects of market volatilities on Wyndham Hotels and McDonalds 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 McDonalds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and McDonalds.
Diversification Opportunities for Wyndham Hotels and McDonalds
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wyndham and McDonalds is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and McDonalds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds 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 McDonalds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McDonalds has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and McDonalds go up and down completely randomly.
Pair Corralation between Wyndham Hotels and McDonalds
Allowing for the 90-day total investment horizon Wyndham Hotels Resorts is expected to generate 0.94 times more return on investment than McDonalds. However, Wyndham Hotels Resorts is 1.06 times less risky than McDonalds. It trades about 0.2 of its potential returns per unit of risk. McDonalds is currently generating about 0.01 per unit of risk. If you would invest 10,079 in Wyndham Hotels Resorts on November 1, 2024 and sell it today you would earn a total of 360.00 from holding Wyndham Hotels Resorts or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. McDonalds
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| McDonalds |
Wyndham Hotels and McDonalds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and McDonalds
The main advantage of trading using opposite Wyndham Hotels and McDonalds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, McDonalds 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 McDonalds will offset losses from the drop in McDonalds' long position.| Wyndham Hotels vs. InterContinental Hotels Group | Wyndham Hotels vs. Hyatt Hotels | Wyndham Hotels vs. Hilton Worldwide Holdings | Wyndham Hotels vs. Marriott International |
| McDonalds vs. Papa Johns International | McDonalds vs. Darden Restaurants | McDonalds vs. Yum China Holdings |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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