Correlation Between Wyndham Hotels and Papa Johns
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Papa Johns 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 Papa Johns 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 Papa Johns International, you can compare the effects of market volatilities on Wyndham Hotels and Papa Johns 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 Papa Johns. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Papa Johns.
Diversification Opportunities for Wyndham Hotels and Papa Johns
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wyndham and Papa is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Papa Johns International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Papa Johns 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 Papa Johns. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Papa Johns International has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Papa Johns go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Papa Johns
Allowing for the 90-day total investment horizon Wyndham Hotels Resorts is expected to generate 0.8 times more return on investment than Papa Johns. However, Wyndham Hotels Resorts is 1.26 times less risky than Papa Johns. It trades about -0.01 of its potential returns per unit of risk. Papa Johns International is currently generating about -0.02 per unit of risk. If you would invest 8,118 in Wyndham Hotels Resorts on January 25, 2024 and sell it today you would lose (968.00) from holding Wyndham Hotels Resorts or give up 11.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. Papa Johns International
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Papa Johns International |
Wyndham Hotels and Papa Johns Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Papa Johns
The main advantage of trading using opposite Wyndham Hotels and Papa Johns positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Papa Johns 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 Papa Johns will offset losses from the drop in Papa Johns' long position.| Wyndham Hotels vs. Yatra Online | Wyndham Hotels vs. Despegar Corp | Wyndham Hotels vs. Mondee Holdings | Wyndham Hotels vs. MakeMyTrip Limited |
| Papa Johns vs. Yum Brands | Papa Johns vs. Wingstop | Papa Johns vs. Darden Restaurants | Papa Johns vs. Chipotle Mexican Grill |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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