Correlation Between Wyndham Hotels and Wynn Resorts

Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Wynn Resorts 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 Wynn Resorts 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 Wynn Resorts Limited, you can compare the effects of market volatilities on Wyndham Hotels and Wynn Resorts 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 Wynn Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Wynn Resorts.

Diversification Opportunities for Wyndham Hotels and Wynn Resorts

-0.65

Correlation Coefficient

Wyndham Hotels  Wynn Resorts

Excellent diversification

The 3 months correlation between Wyndham and Wynn is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Wynn Resorts Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wynn Resorts Limited 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 Wynn Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wynn Resorts Limited has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Wynn Resorts go up and down completely randomly.

Pair Corralation between Wyndham Hotels and Wynn Resorts

Allowing for the 90-day total investment horizon Wyndham Hotels Resorts is expected to generate 0.83 times more return on investment than Wynn Resorts. However, Wyndham Hotels Resorts is 1.2 times less risky than Wynn Resorts. It trades about 0.23 of its potential returns per unit of risk. Wynn Resorts Limited is currently generating about -0.06 per unit of risk. If you would invest  7,763  in Wyndham Hotels Resorts on October 1, 2024 and sell it today you would earn a total of  2,406  from holding Wyndham Hotels Resorts or generate 30.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Wyndham Hotels Resorts  vs.  Wynn Resorts Limited

Wyndham Hotels Resorts

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wyndham Hotels Resorts are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical indicators, Wyndham Hotels demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Wynn Resorts Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wynn Resorts Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Wyndham Hotels and Wynn Resorts

The main advantage of trading using opposite Wyndham Hotels and Wynn Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Wynn Resorts 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 Wynn Resorts will offset losses from the drop in Wynn Resorts' long position.

The idea behind Wyndham Hotels Resorts and Wynn Resorts Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.