Correlation Between Wyndham Hotels and Regis Common

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

Diversification Opportunities for Wyndham Hotels and Regis Common

0.79

Correlation Coefficient

Wyndham Hotels  Regis Common

Poor diversification

The 3 months correlation between Wyndham and Regis is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Regis Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regis Common 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 Regis Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regis Common has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Regis Common go up and down completely randomly.

Pair Corralation between Wyndham Hotels and Regis Common

Allowing for the 90-day total investment horizon Wyndham Hotels is expected to generate 196.38 times less return on investment than Regis Common. But when comparing it to its historical volatility, Wyndham Hotels Resorts is 26.98 times less risky than Regis Common. It trades about 0.01 of its potential returns per unit of risk. Regis Common is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,482  in Regis Common on January 30, 2024 and sell it today you would lose (940.00) from holding Regis Common or give up 63.43% of portfolio value over 90 days.

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

Wyndham Hotels Resorts  vs.  Regis Common

Wyndham Hotels Resorts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wyndham Hotels Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Regis Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regis Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Wyndham Hotels and Regis Common

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

The idea behind Wyndham Hotels Resorts and Regis Common 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.