Correlation Between Codere Online and Wendys

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

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

Diversification Opportunities for Codere Online and Wendys

0.68

Correlation Coefficient

Codere Online  Wendys

Poor diversification

The 3 months correlation between Codere and Wendys is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Codere Online Luxembourg and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and Codere Online 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 Codere Online Luxembourg 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 Codere Online i.e., Codere Online and Wendys go up and down completely randomly.

Pair Corralation between Codere Online and Wendys

Assuming the 90 days horizon Codere Online Luxembourg is expected to generate 3.94 times more return on investment than Wendys. However, Codere Online is 3.94 times more volatile than The Wendys Co. It trades about 0.07 of its potential returns per unit of risk. The Wendys Co is currently generating about -0.08 per unit of risk. If you would invest  60.00  in Codere Online Luxembourg on December 28, 2024 and sell it today you would earn a total of  10.00  from holding Codere Online Luxembourg or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	91.8%
Values	Daily Returns

Codere Online Luxembourg  vs.  The Wendys Co

Codere Online Luxembourg

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Codere Online Luxembourg are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Codere Online showed solid returns over the last few months and may actually be approaching a breakup point.

The Wendys

Risk-Adjusted Performance

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 latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Codere Online and Wendys

The main advantage of trading using opposite Codere Online and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Codere Online 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 Codere Online Luxembourg 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.