Correlation Between Wendys and Full House

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

Diversification Opportunities for Wendys and Full House

-0.51

Correlation Coefficient

Wendys  Full House

Excellent diversification

The 3 months correlation between Wendys and Full is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and Full House Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Full House Resorts 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 Full House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Full House Resorts has no effect on the direction of Wendys i.e., Wendys and Full House go up and down completely randomly.

Pair Corralation between Wendys and Full House

Considering the 90-day investment horizon The Wendys Co is expected to generate 1.2 times more return on investment than Full House. However, Wendys is 1.2 times more volatile than Full House Resorts. It trades about 0.09 of its potential returns per unit of risk. Full House Resorts is currently generating about -0.24 per unit of risk. If you would invest  1,489  in The Wendys Co on December 1, 2024 and sell it today you would earn a total of  61.00  from holding The Wendys Co or generate 4.1% return on investment over 90 days.

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

The Wendys Co  vs.  Full House Resorts

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.

Full House Resorts

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Full House Resorts are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent essential indicators, Full House may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Wendys and Full House

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

The idea behind The Wendys Co and Full House Resorts 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.