Correlation Between Grocery Outlet and Wendys
Can any of the company-specific risk be diversified away by investing in both Grocery Outlet 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 Grocery Outlet and Wendys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grocery Outlet Holding and The Wendys Co, you can compare the effects of market volatilities on Grocery Outlet 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 Grocery Outlet with a short position of Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and Wendys.
Diversification Opportunities for Grocery Outlet and Wendys
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grocery and Wendys is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and Grocery Outlet 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 Grocery Outlet Holding 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 Grocery Outlet i.e., Grocery Outlet and Wendys go up and down completely randomly.
Pair Corralation between Grocery Outlet and Wendys
Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the Wendys. In addition to that, Grocery Outlet is 1.64 times more volatile than The Wendys Co. It trades about -0.02 of its total potential returns per unit of risk. The Wendys Co is currently generating about -0.01 per unit of volatility. If you would invest 2,135 in The Wendys Co on September 3, 2024 and sell it today you would lose (299.00) from holding The Wendys Co or give up 14.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grocery Outlet Holding vs. The Wendys Co
Performance |
| Timeline |
| Grocery Outlet Holding |
| The Wendys |
Grocery Outlet and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grocery Outlet and Wendys
The main advantage of trading using opposite Grocery Outlet and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet 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.| Grocery Outlet vs. Natural Grocers by | Grocery Outlet vs. Village Super Market | Grocery Outlet vs. Ingles Markets Incorporated | Grocery Outlet vs. Ocado Group plc |
| 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 Stocks Directory module to find actively traded stocks across global markets.
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