Correlation Between Wendys and HyreCar

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

Diversification Opportunities for Wendys and HyreCar

-0.7

Correlation Coefficient

Wendys  HyreCar

Excellent diversification

The 3 months correlation between Wendys and HyreCar is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and HyreCar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HyreCar 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 HyreCar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HyreCar has no effect on the direction of Wendys i.e., Wendys and HyreCar go up and down completely randomly.

Pair Corralation between Wendys and HyreCar

Considering the 90-day investment horizon The Wendys Co is expected to generate 0.15 times more return on investment than HyreCar. However, The Wendys Co is 6.84 times less risky than HyreCar. It trades about 0.02 of its potential returns per unit of risk. HyreCar is currently generating about -0.13 per unit of risk. If you would invest  1,733  in The Wendys Co on September 13, 2024 and sell it today you would earn a total of  15.00  from holding The Wendys Co or generate 0.87% return on investment over 90 days.

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

The Wendys Co  vs.  HyreCar

The Wendys

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Wendys Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Wendys is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

HyreCar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HyreCar has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Wendys and HyreCar

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

The idea behind The Wendys Co and HyreCar 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.