Correlation Between Interactive Strength and Wendys

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

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

Diversification Opportunities for Interactive Strength and Wendys

0.51

Correlation Coefficient

Interactive Strength  Wendys

Very weak diversification

The 3 months correlation between Interactive and Wendys is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Interactive Strength Common and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and Interactive Strength 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 Interactive Strength Common 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 Interactive Strength i.e., Interactive Strength and Wendys go up and down completely randomly.

Pair Corralation between Interactive Strength and Wendys

Given the investment horizon of 90 days Interactive Strength Common is expected to generate 6.94 times more return on investment than Wendys. However, Interactive Strength is 6.94 times more volatile than The Wendys Co. It trades about 0.02 of its potential returns per unit of risk. The Wendys Co is currently generating about -0.14 per unit of risk. If you would invest  299.00  in Interactive Strength Common on December 2, 2024 and sell it today you would lose (42.00) from holding Interactive Strength Common or give up 14.05% of portfolio value over 90 days.

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

Interactive Strength Common  vs.  The Wendys Co

Interactive Strength

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Interactive Strength Common are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Interactive Strength 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 unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Interactive Strength and Wendys

The main advantage of trading using opposite Interactive Strength and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interactive Strength 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 Interactive Strength Common 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.