Correlation Between Partner Communications and Wendys

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

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

Diversification Opportunities for Partner Communications and Wendys

-0.64

Correlation Coefficient

Partner Communications  Wendys

Excellent diversification

The 3 months correlation between Partner and Wendys is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Partner Communications and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and Partner Communications 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 Partner Communications 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 Partner Communications i.e., Partner Communications and Wendys go up and down completely randomly.

Pair Corralation between Partner Communications and Wendys

Assuming the 90 days horizon Partner Communications is expected to generate 3.2 times more return on investment than Wendys. However, Partner Communications is 3.2 times more volatile than The Wendys Co. It trades about 0.12 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  498.00  in Partner Communications on December 29, 2024 and sell it today you would earn a total of  204.00  from holding Partner Communications or generate 40.96% return on investment over 90 days.

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

Partner Communications  vs.  The Wendys Co

Partner Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Partner Communications are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Partner Communications reported 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 Partner Communications and Wendys

The main advantage of trading using opposite Partner Communications and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Partner Communications 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 Partner Communications 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.