Correlation Between Wendys and 958102AR6

Can any of the company-specific risk be diversified away by investing in both Wendys and 958102AR6 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 958102AR6 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 WDC 31 01 FEB 32, you can compare the effects of market volatilities on Wendys and 958102AR6 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 958102AR6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wendys and 958102AR6.

Diversification Opportunities for Wendys and 958102AR6

0.3

Correlation Coefficient

Wendys  958102AR6

Weak diversification

The 3 months correlation between Wendys and 958102AR6 is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and WDC 31 01 FEB 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WDC 31 01 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 958102AR6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WDC 31 01 has no effect on the direction of Wendys i.e., Wendys and 958102AR6 go up and down completely randomly.

Pair Corralation between Wendys and 958102AR6

Considering the 90-day investment horizon The Wendys Co is expected to under-perform the 958102AR6. But the stock apears to be less risky and, when comparing its historical volatility, The Wendys Co is 1.34 times less risky than 958102AR6. The stock trades about -0.54 of its potential returns per unit of risk. The WDC 31 01 FEB 32 is currently generating about -0.31 of returns per unit of risk over similar time horizon. If you would invest  8,440  in WDC 31 01 FEB 32 on September 25, 2024 and sell it today you would lose (611.00) from holding WDC 31 01 FEB 32 or give up 7.24% of portfolio value over 90 days.

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

The Wendys Co  vs.  WDC 31 01 FEB 32

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.

WDC 31 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WDC 31 01 FEB 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for WDC 31 01 FEB 32 investors.

Pair Trading with Wendys and 958102AR6

The main advantage of trading using opposite Wendys and 958102AR6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wendys position performs unexpectedly, 958102AR6 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 958102AR6 will offset losses from the drop in 958102AR6's long position.

The idea behind The Wendys Co and WDC 31 01 FEB 32 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 Anywhere module to track or share privately all of your investments from the convenience of any device.