Correlation Between Coupang LLC and Wendys
Can any of the company-specific risk be diversified away by investing in both Coupang LLC and Wendys 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 Coupang LLC and Wendys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coupang LLC and The Wendys Co, you can compare the effects of market volatilities on Coupang LLC and Wendys 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 Coupang LLC with a short position of Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coupang LLC and Wendys.
Diversification Opportunities for Coupang LLC and Wendys
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coupang and Wendys is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Coupang LLC and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and Coupang LLC 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 Coupang LLC are associated (or correlated) with Wendys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Wendys has no effect on the direction of Coupang LLC i.e., Coupang LLC and Wendys go up and down completely randomly.
Pair Corralation between Coupang LLC and Wendys
Given the investment horizon of 90 days Coupang LLC is expected to generate 2.08 times more return on investment than Wendys. However, Coupang LLC is 2.08 times more volatile than The Wendys Co. It trades about -0.03 of its potential returns per unit of risk. The Wendys Co is currently generating about -0.2 per unit of risk. If you would invest 2,570 in Coupang LLC on September 4, 2024 and sell it today you would lose (85.00) from holding Coupang LLC or give up 3.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coupang LLC vs. The Wendys Co
Performance |
| Timeline |
| Coupang LLC |
| The Wendys |
Coupang LLC and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coupang LLC and Wendys
The main advantage of trading using opposite Coupang LLC and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coupang LLC position performs unexpectedly, Wendys 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 Wendys will offset losses from the drop in Wendys' long position.| Coupang LLC vs. PDD Holdings | Coupang LLC vs. Alibaba Group Holding | Coupang LLC vs. Global E Online | Coupang LLC vs. Sea |
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Check out your portfolio center.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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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