Correlation Between Wendys and Cannae Holdings

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

Diversification Opportunities for Wendys and Cannae Holdings

-0.04

Correlation Coefficient

Wendys  Cannae Holdings

Good diversification

The 3 months correlation between Wendys and Cannae is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and Cannae Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cannae Holdings 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 Cannae Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cannae Holdings has no effect on the direction of Wendys i.e., Wendys and Cannae Holdings go up and down completely randomly.

Pair Corralation between Wendys and Cannae Holdings

Considering the 90-day investment horizon The Wendys Co is expected to under-perform the Cannae Holdings. But the stock apears to be less risky and, when comparing its historical volatility, The Wendys Co is 1.17 times less risky than Cannae Holdings. The stock trades about -0.07 of its potential returns per unit of risk. The Cannae Holdings is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,970  in Cannae Holdings on December 28, 2024 and sell it today you would lose (70.00) from holding Cannae Holdings or give up 3.55% of portfolio value over 90 days.

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

The Wendys Co  vs.  Cannae Holdings

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.

Cannae Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cannae Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Cannae Holdings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Wendys and Cannae Holdings

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

The idea behind The Wendys Co and Cannae Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.