Correlation Between Wyndham Hotels and Starbucks
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Starbucks 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 Starbucks 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 Starbucks, you can compare the effects of market volatilities on Wyndham Hotels and Starbucks 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 Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Starbucks.
Diversification Opportunities for Wyndham Hotels and Starbucks
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wyndham and Starbucks is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks 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 Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Starbucks go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Starbucks
Allowing for the 90-day total investment horizon Wyndham Hotels Resorts is expected to generate 1.3 times more return on investment than Starbucks. However, Wyndham Hotels is 1.3 times more volatile than Starbucks. It trades about 0.28 of its potential returns per unit of risk. Starbucks is currently generating about 0.19 per unit of risk. If you would invest 8,876 in Wyndham Hotels Resorts on September 4, 2024 and sell it today you would earn a total of 904.00 from holding Wyndham Hotels Resorts or generate 10.18% 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. Starbucks
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Starbucks |
Wyndham Hotels and Starbucks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Starbucks
The main advantage of trading using opposite Wyndham Hotels and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Starbucks 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 Starbucks will offset losses from the drop in Starbucks' long position.| Wyndham Hotels vs. InterContinental Hotels Group | Wyndham Hotels vs. Hyatt Hotels | Wyndham Hotels vs. Hilton Worldwide Holdings | Wyndham Hotels vs. Marriott International |
| Starbucks vs. Hyatt Hotels | Starbucks vs. Smart Share Global | Starbucks vs. Sweetgreen | Starbucks 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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