Correlation Between Dennys Corp and Wendys
Can any of the company-specific risk be diversified away by investing in both Dennys Corp 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 Dennys Corp and Wendys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dennys Corp and The Wendys Co, you can compare the effects of market volatilities on Dennys Corp 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 Dennys Corp with a short position of Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dennys Corp and Wendys.
Diversification Opportunities for Dennys Corp and Wendys
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dennys and Wendys is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Dennys Corp and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and Dennys Corp 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 Dennys Corp 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 Dennys Corp i.e., Dennys Corp and Wendys go up and down completely randomly.
Pair Corralation between Dennys Corp and Wendys
Given the investment horizon of 90 days Dennys Corp is expected to generate 12.04 times less return on investment than Wendys. In addition to that, Dennys Corp is 2.09 times more volatile than The Wendys Co. It trades about 0.0 of its total potential returns per unit of risk. The Wendys Co is currently generating about 0.1 per unit of volatility. If you would invest 1,640 in The Wendys Co on August 29, 2024 and sell it today you would earn a total of 199.00 from holding The Wendys Co or generate 12.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dennys Corp vs. The Wendys Co
Performance |
| Timeline |
| Dennys Corp |
| The Wendys |
Dennys Corp and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dennys Corp and Wendys
The main advantage of trading using opposite Dennys Corp and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dennys Corp 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.| Dennys Corp vs. Jack In The | Dennys Corp vs. Potbelly Co | Dennys Corp vs. BJs Restaurants | Dennys Corp vs. One Group Hospitality |
| Wendys vs. Jack In The | Wendys vs. Potbelly Co | Wendys vs. BJs Restaurants | Wendys vs. One Group Hospitality |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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