Correlation Between Wyndham Hotels and Wendys
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Wendys 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 Wendys 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 The Wendys Co, you can compare the effects of market volatilities on Wyndham Hotels and Wendys 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 Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Wendys.
Diversification Opportunities for Wyndham Hotels and Wendys
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Wyndham and Wendys is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys 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 Wendys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Wendys has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Wendys go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Wendys
Allowing for the 90-day total investment horizon Wyndham Hotels Resorts is expected to generate 0.91 times more return on investment than Wendys. However, Wyndham Hotels Resorts is 1.1 times less risky than Wendys. It trades about 0.2 of its potential returns per unit of risk. The Wendys Co is currently generating about -0.22 per unit of risk. If you would invest 9,712 in Wyndham Hotels Resorts on September 12, 2024 and sell it today you would earn a total of 432.00 from holding Wyndham Hotels Resorts or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. The Wendys Co
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| The Wendys |
Wyndham Hotels and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Wendys
The main advantage of trading using opposite Wyndham Hotels and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Wendys 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 Wendys will offset losses from the drop in Wendys' long position.| Wyndham Hotels vs. InterContinental Hotels Group | Wyndham Hotels vs. Hilton Worldwide Holdings | Wyndham Hotels vs. Marriott International | Wyndham Hotels vs. Choice Hotels International |
| Wendys vs. Yum Brands | Wendys vs. Dominos Pizza | Wendys vs. Darden Restaurants | Wendys vs. Papa Johns International |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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