Correlation Between Wendys and CROWN

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

Diversification Opportunities for Wendys and CROWN

-0.21

Correlation Coefficient

Wendys  CROWN

Very good diversification

The 3 months correlation between Wendys and CROWN is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and CROWN CASTLE INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CROWN CASTLE INTERNA 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 CROWN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CROWN CASTLE INTERNA has no effect on the direction of Wendys i.e., Wendys and CROWN go up and down completely randomly.

Pair Corralation between Wendys and CROWN

Considering the 90-day investment horizon The Wendys Co is expected to under-perform the CROWN. But the stock apears to be less risky and, when comparing its historical volatility, The Wendys Co is 47.29 times less risky than CROWN. The stock trades about -0.02 of its potential returns per unit of risk. The CROWN CASTLE INTERNATIONAL is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6,671  in CROWN CASTLE INTERNATIONAL on September 23, 2024 and sell it today you would earn a total of  176.00  from holding CROWN CASTLE INTERNATIONAL or generate 2.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.1%
Values	Daily Returns

The Wendys Co  vs.  CROWN CASTLE INTERNATIONAL

The Wendys

Risk-Adjusted Performance

0 of 100

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 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.

CROWN CASTLE INTERNA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Wendys and CROWN

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

The idea behind The Wendys Co and CROWN CASTLE INTERNATIONAL 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.