Correlation Between Wyndham Hotels and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Planet Fitness 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 Planet Fitness 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 Planet Fitness, you can compare the effects of market volatilities on Wyndham Hotels and Planet Fitness 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 Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Planet Fitness.
Diversification Opportunities for Wyndham Hotels and Planet Fitness
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wyndham and Planet is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness 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 Planet Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Fitness has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Planet Fitness go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Planet Fitness
Allowing for the 90-day total investment horizon Wyndham Hotels is expected to generate 1.65 times less return on investment than Planet Fitness. But when comparing it to its historical volatility, Wyndham Hotels Resorts is 1.19 times less risky than Planet Fitness. It trades about 0.07 of its potential returns per unit of risk. Planet Fitness is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,804 in Planet Fitness on September 4, 2024 and sell it today you would earn a total of 3,135 from holding Planet Fitness or generate 46.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. Planet Fitness
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Planet Fitness |
Wyndham Hotels and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Planet Fitness
The main advantage of trading using opposite Wyndham Hotels and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Planet Fitness 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 Planet Fitness will offset losses from the drop in Planet Fitness' long position.| Wyndham Hotels vs. InterContinental Hotels Group | Wyndham Hotels vs. Hyatt Hotels | Wyndham Hotels vs. Hilton Worldwide Holdings | Wyndham Hotels vs. Marriott International |
| Planet Fitness vs. Hyatt Hotels | Planet Fitness vs. Smart Share Global | Planet Fitness vs. Sweetgreen | Planet Fitness 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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