Correlation Between Wyndham Hotels and Shake Shack
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Shake Shack 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 Shake Shack 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 Shake Shack, you can compare the effects of market volatilities on Wyndham Hotels and Shake Shack 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 Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Shake Shack.
Diversification Opportunities for Wyndham Hotels and Shake Shack
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wyndham and Shake is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack 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 Shake Shack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shake Shack has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Shake Shack go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Shake Shack
Allowing for the 90-day total investment horizon Wyndham Hotels Resorts is expected to generate 0.73 times more return on investment than Shake Shack. However, Wyndham Hotels Resorts is 1.37 times less risky than Shake Shack. It trades about 0.28 of its potential returns per unit of risk. Shake Shack is currently generating about 0.17 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. Shake Shack
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Shake Shack |
Wyndham Hotels and Shake Shack Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Shake Shack
The main advantage of trading using opposite Wyndham Hotels and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Shake Shack 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 Shake Shack will offset losses from the drop in Shake Shack'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 |
| Shake Shack vs. Hyatt Hotels | Shake Shack vs. Smart Share Global | Shake Shack vs. Sweetgreen | Shake Shack 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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