Correlation Between Wendys and Flanigans Enterprises

Can any of the company-specific risk be diversified away by investing in both Wendys and Flanigans Enterprises 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 Flanigans Enterprises 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 Flanigans Enterprises, you can compare the effects of market volatilities on Wendys and Flanigans Enterprises 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 Flanigans Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wendys and Flanigans Enterprises.

Diversification Opportunities for Wendys and Flanigans Enterprises

0.27

Correlation Coefficient

Wendys  Flanigans Enterprises

Modest diversification

The 3 months correlation between Wendys and Flanigans is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and Flanigans Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flanigans Enterprises 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 Flanigans Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flanigans Enterprises has no effect on the direction of Wendys i.e., Wendys and Flanigans Enterprises go up and down completely randomly.

Pair Corralation between Wendys and Flanigans Enterprises

Considering the 90-day investment horizon The Wendys Co is expected to under-perform the Flanigans Enterprises. But the stock apears to be less risky and, when comparing its historical volatility, The Wendys Co is 1.65 times less risky than Flanigans Enterprises. The stock trades about -0.51 of its potential returns per unit of risk. The Flanigans Enterprises is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,460  in Flanigans Enterprises on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Flanigans Enterprises or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

The Wendys Co  vs.  Flanigans Enterprises

The Wendys

Risk-Adjusted Performance

0 of 100

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.

Flanigans Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flanigans Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Flanigans Enterprises is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Wendys and Flanigans Enterprises

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

The idea behind The Wendys Co and Flanigans Enterprises 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.