Correlation Between Wendys and Gambling

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

Diversification Opportunities for Wendys and Gambling

-0.29

Correlation Coefficient

Wendys  Gambling

Very good diversification

The 3 months correlation between Wendys and Gambling is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and Gambling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gambling Group 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 Gambling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gambling Group has no effect on the direction of Wendys i.e., Wendys and Gambling go up and down completely randomly.

Pair Corralation between Wendys and Gambling

Considering the 90-day investment horizon The Wendys Co is expected to under-perform the Gambling. But the stock apears to be less risky and, when comparing its historical volatility, The Wendys Co is 1.67 times less risky than Gambling. The stock trades about -0.07 of its potential returns per unit of risk. The Gambling Group is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,426  in Gambling Group on December 29, 2024 and sell it today you would lose (91.00) from holding Gambling Group or give up 6.38% 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.  Gambling Group

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.

Gambling Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gambling Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Gambling is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wendys and Gambling

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

The idea behind The Wendys Co and Gambling Group 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.