Correlation Between Playtech Plc and Wendys

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

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

Diversification Opportunities for Playtech Plc and Wendys

0.22

Correlation Coefficient

Playtech Plc  Wendys

Modest diversification

The 3 months correlation between Playtech and Wendys is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and Playtech Plc 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 Playtech plc 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 Playtech Plc i.e., Playtech Plc and Wendys go up and down completely randomly.

Pair Corralation between Playtech Plc and Wendys

Assuming the 90 days horizon Playtech plc is expected to generate 0.89 times more return on investment than Wendys. However, Playtech plc is 1.12 times less risky than Wendys. It trades about -0.04 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  940.00  in Playtech plc on December 28, 2024 and sell it today you would lose (40.00) from holding Playtech plc or give up 4.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Playtech plc  vs.  The Wendys Co

Playtech plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Playtech plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Playtech Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 Playtech Plc and Wendys

The main advantage of trading using opposite Playtech Plc and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc 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 Playtech plc 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.