Correlation Between Inspired Entertainment and Wendys
Can any of the company-specific risk be diversified away by investing in both Inspired Entertainment 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 Inspired Entertainment and Wendys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inspired Entertainment and The Wendys Co, you can compare the effects of market volatilities on Inspired Entertainment 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 Inspired Entertainment with a short position of Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspired Entertainment and Wendys.
Diversification Opportunities for Inspired Entertainment and Wendys
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Inspired and Wendys is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Inspired Entertainment and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys and Inspired Entertainment 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 Inspired Entertainment 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 Inspired Entertainment i.e., Inspired Entertainment and Wendys go up and down completely randomly.
Pair Corralation between Inspired Entertainment and Wendys
Given the investment horizon of 90 days Inspired Entertainment is expected to generate 1.74 times more return on investment than Wendys. However, Inspired Entertainment is 1.74 times more volatile than The Wendys Co. It trades about 0.04 of its potential returns per unit of risk. The Wendys Co is currently generating about 0.01 per unit of risk. If you would invest 823.00 in Inspired Entertainment on September 3, 2024 and sell it today you would earn a total of 158.00 from holding Inspired Entertainment or generate 19.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inspired Entertainment vs. The Wendys Co
Performance |
| Timeline |
| Inspired Entertainment |
| The Wendys |
Inspired Entertainment and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inspired Entertainment and Wendys
The main advantage of trading using opposite Inspired Entertainment and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspired Entertainment 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.| Inspired Entertainment vs. Canterbury Park Holding | Inspired Entertainment vs. Accel Entertainment | Inspired Entertainment vs. Gambling Group | Inspired Entertainment vs. PlayAGS |
| 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 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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