Correlation Between Hall Of and Wendys

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

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

Diversification Opportunities for Hall Of and Wendys

-0.69

Correlation Coefficient

Hall Of  Wendys

Excellent diversification

The 3 months correlation between Hall and Wendys is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hall of Fame and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and Hall Of 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 Hall of Fame 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 Hall Of i.e., Hall Of and Wendys go up and down completely randomly.

Pair Corralation between Hall Of and Wendys

Assuming the 90 days horizon Hall of Fame is expected to generate 10.51 times more return on investment than Wendys. However, Hall Of is 10.51 times more volatile than The Wendys Co. It trades about 0.04 of its potential returns per unit of risk. The Wendys Co is currently generating about -0.07 per unit of risk. If you would invest  0.44  in Hall of Fame on December 27, 2024 and sell it today you would lose (0.16) from holding Hall of Fame or give up 36.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	85.25%
Values	Daily Returns

Hall of Fame  vs.  The Wendys Co

Hall of Fame

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hall of Fame are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hall Of 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 Hall Of and Wendys

The main advantage of trading using opposite Hall Of and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hall Of 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 Hall of Fame 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .