Correlation Between Flanigans Enterprises and Wendys

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

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

Diversification Opportunities for Flanigans Enterprises and Wendys

0.06

Correlation Coefficient

Flanigans Enterprises  Wendys

Significant diversification

The 3 months correlation between Flanigans and Wendys is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Flanigans Enterprises and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and Flanigans Enterprises 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 Flanigans Enterprises 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 Flanigans Enterprises i.e., Flanigans Enterprises and Wendys go up and down completely randomly.

Pair Corralation between Flanigans Enterprises and Wendys

Considering the 90-day investment horizon Flanigans Enterprises is expected to generate 1.03 times more return on investment than Wendys. However, Flanigans Enterprises is 1.03 times more volatile than The Wendys Co. It trades about -0.03 of its potential returns per unit of risk. The Wendys Co is currently generating about -0.25 per unit of risk. If you would invest  2,484  in Flanigans Enterprises on September 23, 2024 and sell it today you would lose (20.00) from holding Flanigans Enterprises or give up 0.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Flanigans Enterprises  vs.  The Wendys Co

Flanigans Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flanigans Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

The Wendys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Wendys Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Wendys is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Flanigans Enterprises and Wendys

The main advantage of trading using opposite Flanigans Enterprises and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flanigans Enterprises 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 Flanigans Enterprises 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.