Correlation Between Wendys and Fenbo Holdings

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

Diversification Opportunities for Wendys and Fenbo Holdings

-0.01

Correlation Coefficient

Wendys  Fenbo Holdings

Good diversification

The 3 months correlation between Wendys and Fenbo is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and Fenbo Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fenbo 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 Fenbo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fenbo Holdings has no effect on the direction of Wendys i.e., Wendys and Fenbo Holdings go up and down completely randomly.

Pair Corralation between Wendys and Fenbo Holdings

Considering the 90-day investment horizon The Wendys Co is expected to generate 0.28 times more return on investment than Fenbo Holdings. However, The Wendys Co is 3.52 times less risky than Fenbo Holdings. It trades about -0.07 of its potential returns per unit of risk. Fenbo Holdings Limited is currently generating about -0.05 per unit of risk. If you would invest  1,631  in The Wendys Co on December 25, 2024 and sell it today you would lose (124.00) from holding The Wendys Co or give up 7.6% 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.  Fenbo Holdings Limited

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.

Fenbo Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fenbo Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental drivers 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 Wendys and Fenbo Holdings

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

The idea behind The Wendys Co and Fenbo Holdings Limited 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.