Correlation Between Plexus Corp and Wendys

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

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

Diversification Opportunities for Plexus Corp and Wendys

0.32

Correlation Coefficient

Plexus Corp  Wendys

Weak diversification

The 3 months correlation between Plexus and Wendys is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Plexus Corp and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and Plexus Corp 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 Plexus Corp 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 Plexus Corp i.e., Plexus Corp and Wendys go up and down completely randomly.

Pair Corralation between Plexus Corp and Wendys

Given the investment horizon of 90 days Plexus Corp is expected to generate 1.17 times more return on investment than Wendys. However, Plexus Corp is 1.17 times more volatile than The Wendys Co. It trades about 0.14 of its potential returns per unit of risk. The Wendys Co is currently generating about -0.15 per unit of risk. If you would invest  16,058  in Plexus Corp on September 13, 2024 and sell it today you would earn a total of  604.00  from holding Plexus Corp or generate 3.76% return on investment over 90 days.

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

Plexus Corp  vs.  The Wendys Co

Plexus Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Plexus Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Plexus Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

The Wendys

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Wendys Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Plexus Corp and Wendys

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

Check out your portfolio center.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.