Correlation Between Wyndham Hotels and Service International
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Service International 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 Service International 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 Service International, you can compare the effects of market volatilities on Wyndham Hotels and Service International 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 Service International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Service International.
Diversification Opportunities for Wyndham Hotels and Service International
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wyndham and Service is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Service International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Service International 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 Service International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Service International has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Service International go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Service International
Allowing for the 90-day total investment horizon Wyndham Hotels is expected to generate 1.64 times less return on investment than Service International. But when comparing it to its historical volatility, Wyndham Hotels Resorts is 1.13 times less risky than Service International. It trades about 0.24 of its potential returns per unit of risk. Service International is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 7,646 in Service International on August 30, 2024 and sell it today you would earn a total of 1,214 from holding Service International or generate 15.88% 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. Service International
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Service International |
Wyndham Hotels and Service International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Service International
The main advantage of trading using opposite Wyndham Hotels and Service International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Service International 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 Service International will offset losses from the drop in Service International'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 |
| Service International vs. Bright Horizons Family | Service International vs. Rollins | Service International vs. Smart Share Global | Service International vs. Carriage Services |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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