Correlation Between Wendys and PlayAGS

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

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

Diversification Opportunities for Wendys and PlayAGS

-0.74

Correlation Coefficient

Wendys  PlayAGS

Pay attention - limited upside

The 3 months correlation between Wendys and PlayAGS is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and PlayAGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PlayAGS and Wendys 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 The Wendys Co are associated (or correlated) with PlayAGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PlayAGS has no effect on the direction of Wendys i.e., Wendys and PlayAGS go up and down completely randomly.

Pair Corralation between Wendys and PlayAGS

Considering the 90-day investment horizon The Wendys Co is expected to under-perform the PlayAGS. In addition to that, Wendys is 4.67 times more volatile than PlayAGS. It trades about -0.04 of its total potential returns per unit of risk. PlayAGS is currently generating about 0.25 per unit of volatility. If you would invest  1,149  in PlayAGS on December 19, 2024 and sell it today you would earn a total of  63.00  from holding PlayAGS or generate 5.48% return on investment over 90 days.

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

The Wendys Co  vs.  PlayAGS

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 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.

PlayAGS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PlayAGS are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, PlayAGS is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Wendys and PlayAGS

The main advantage of trading using opposite Wendys and PlayAGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wendys position performs unexpectedly, PlayAGS 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 PlayAGS will offset losses from the drop in PlayAGS's long position.

The idea behind The Wendys Co and PlayAGS 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.