Correlation Between Wyndham Hotels and Golden Metal

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

Diversification Opportunities for Wyndham Hotels and Golden Metal

0.54

Correlation Coefficient

Wyndham Hotels  Golden Metal

Very weak diversification

The 3 months correlation between Wyndham and Golden is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Golden Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Metal Resources 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 Golden Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Metal Resources has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Golden Metal go up and down completely randomly.

Pair Corralation between Wyndham Hotels and Golden Metal

Assuming the 90 days trading horizon Wyndham Hotels Resorts is expected to generate 0.47 times more return on investment than Golden Metal. However, Wyndham Hotels Resorts is 2.11 times less risky than Golden Metal. It trades about 0.22 of its potential returns per unit of risk. Golden Metal Resources is currently generating about 0.05 per unit of risk. If you would invest  7,907  in Wyndham Hotels Resorts on September 26, 2024 and sell it today you would earn a total of  2,278  from holding Wyndham Hotels Resorts or generate 28.81% return on investment over 90 days.

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

Wyndham Hotels Resorts  vs.  Golden Metal Resources

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. In spite of comparatively uncertain basic indicators, Wyndham Hotels unveiled solid returns over the last few months and may actually be approaching a breakup point.

Golden Metal Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Metal Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Golden Metal may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Wyndham Hotels and Golden Metal

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

The idea behind Wyndham Hotels Resorts and Golden Metal Resources 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..