Correlation Between Boeing and Wendys

Can any of the company-specific risk be diversified away by investing in both Boeing 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 Boeing and Wendys into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Boeing and The Wendys Co, you can compare the effects of market volatilities on Boeing 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 Boeing with a short position of Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Wendys.

Diversification Opportunities for Boeing and Wendys

-0.45

Correlation Coefficient

Boeing  Wendys

Very good diversification

The 3 months correlation between Boeing and Wendys is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and Boeing 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 The Boeing 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 Boeing i.e., Boeing and Wendys go up and down completely randomly.

Pair Corralation between Boeing and Wendys

Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Wendys. In addition to that, Boeing is 1.12 times more volatile than The Wendys Co. It trades about -0.08 of its total potential returns per unit of risk. The Wendys Co is currently generating about 0.1 per unit of volatility. If you would invest  1,666  in The Wendys Co on August 30, 2024 and sell it today you would earn a total of  187.00  from holding The Wendys Co or generate 11.22% return on investment over 90 days.

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

The Boeing  vs.  The Wendys Co

Boeing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Boeing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

The Wendys

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Wendys Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Wendys may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Boeing and Wendys

The main advantage of trading using opposite Boeing and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing 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.

The idea behind The Boeing and The Wendys Co 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.