Correlation Between GameStop Corp and Wendys
Can any of the company-specific risk be diversified away by investing in both GameStop 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 GameStop Corp and Wendys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GameStop Corp and The Wendys Co, you can compare the effects of market volatilities on GameStop 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 GameStop Corp with a short position of Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and Wendys.
Diversification Opportunities for GameStop Corp and Wendys
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GameStop and Wendys is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding GameStop 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 GameStop 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 GameStop 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 GameStop Corp i.e., GameStop Corp and Wendys go up and down completely randomly.
Pair Corralation between GameStop Corp and Wendys
Considering the 90-day investment horizon GameStop Corp is expected to generate 2.09 times more return on investment than Wendys. However, GameStop Corp is 2.09 times more volatile than The Wendys Co. It trades about 0.39 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 2,233 in GameStop Corp on September 3, 2024 and sell it today you would earn a total of 672.00 from holding GameStop Corp or generate 30.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GameStop Corp vs. The Wendys Co
Performance |
| Timeline |
| GameStop Corp |
| The Wendys |
GameStop Corp and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GameStop Corp and Wendys
The main advantage of trading using opposite GameStop Corp and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop 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.| GameStop Corp vs. RH | GameStop Corp vs. Dicks Sporting Goods | GameStop Corp vs. Best Buy Co | GameStop Corp vs. AutoZone |
| Wendys vs. Highway Holdings Limited | Wendys vs. QCR Holdings | Wendys vs. Partner Communications | Wendys vs. Acumen Pharmaceuticals |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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