Correlation Between Sweetgreen and Wendys

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

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

Diversification Opportunities for Sweetgreen and Wendys

-0.02

Correlation Coefficient

Sweetgreen  Wendys

Good diversification

The 3 months correlation between Sweetgreen and Wendys is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and Sweetgreen 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 Sweetgreen 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 Sweetgreen i.e., Sweetgreen and Wendys go up and down completely randomly.

Pair Corralation between Sweetgreen and Wendys

Allowing for the 90-day total investment horizon Sweetgreen is expected to under-perform the Wendys. In addition to that, Sweetgreen is 2.19 times more volatile than The Wendys Co. It trades about -0.05 of its total potential returns per unit of risk. The Wendys Co is currently generating about -0.07 per unit of volatility. If you would invest  1,600  in The Wendys Co on December 29, 2024 and sell it today you would lose (137.00) from holding The Wendys Co or give up 8.56% of portfolio value over 90 days.

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

Sweetgreen  vs.  The Wendys Co

Sweetgreen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sweetgreen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company 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 Sweetgreen and Wendys

The main advantage of trading using opposite Sweetgreen and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sweetgreen 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 Sweetgreen 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.